author: Graffeo, J.

text:
    [962 NE2d 765, 939 NYS2d 274]
    Assured Guaranty (UK) Ltd., in the Right of Itself and of Orkney Re II PLC, Respondent, v J.P. Morgan Investment Management Inc., Appellant.
    Argued November 15, 2011;
    decided December 20, 2011

      POINTS OF COUNSEL

      Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York City (Walter Rieman, Richard A. Rosen, John F. Baughman, Farrah R. Berse and Jennifer K. Vakiener of counsel), for appellant.
    I. This Court’s decisions support interpreting the Martin Act to preempt non-fraud tort claims. (Kerusa Co. LLC v W10Z/ 515 Real Estate Ltd. Partnership, 12 NY3d 236; CPC Intl. v McKesson Corp., 70 NY2d 268; Horn v 440 E. 57th Co., 151 AD2d 112; Whitehall Tenants Corp. v Estate of Olnick, 213 AD2d 200; Eagle Tenants Corp. v Fishbein, 182 AD2d 610; Breakwaters Townhomes Assn. of Buffalo v Breakwaters of Buffalo, 207 AD2d 963; Hamlet on Olde Oyster Bay Home Owners Assn., Inc. v Holiday Org., Inc., 65 AD3d 1284; Thompson v Parkchester Apts. Co., 249 AD2d 68; Rego Park Gardens Owners v Rego Park Gardens Assoc., 191 AD2d 621; Castellano v Young & Rubicam, Inc., 257 F3d 171.) II. Legislative intent favors preemption of non-fraud tort claims. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Riley v County of Broome, 95 NY2d 455; Llanos v Shell Oil Co., 55 AD3d 796; Anwar v Fair-field Greenwich Ltd., 728 F Supp 2d 354; Schneidewind v ANR Pipeline Co., 485 US 293; Guice v Charles Schwab & Co., 89 NY2d 31; Northern Natural Gas Co. v Kansas Corporation Comm’n, 372 US 84; DJL Rest. Corp. v City of New York, 96 NY2d 91; Robin v Incorporated Vil. of Hempstead, 30 NY2d 347;
      Matter of Lansdown Entertainment Corp. v New York City Dept. of Consumer Affairs, 74 NY2d 761.) III. The First Department’s recent holdings are a departure from its own long-standing and well-recognized precedent. (Horn v 440 E. 57th Co., 151 AD2d 112; CPC Intl. v McKesson Corp., 70 NY2d 268; Whitehall Tenants Corp. v Estate of Olnick, 213 AD2d 200; Thompson v Parkchester Apts. Co., 249 AD2d 68; Rego Park Gardens Owners v Rego Park Gardens Assoc., 191 AD2d 621; Eagle Tenants Corp. v Fishbein, 182 AD2d 610; Meridian Horizon Fund, LP v Tremont Group Holdings, Inc., 747 F Supp 2d 406; Lehman Bros. Commercial Corp. v Minmetals Intl. Non-Ferrous Metals Trading Co., 179 F Supp 2d 118; Gabriel Capital, L.P. v Natwest Fin., Inc., 137 F Supp 2d 251; Granite Partners, L.P. v Bear, Stearns & Co. Inc., 17 F Supp 2d 275.) IV The rationale for Martin Act preemption reflects significant policy considerations. (Herman & MacLean v Huddleston, 459 US 375; Transamerica Mortgage Advisors, Inc. v Lewis, 444 US 11; Blue Chip Stamps v Manor Drug Stores, 421 US 723; Scalp & Blade v Advest, Inc., 281 AD2d 882; CMMF, LLC v J.P. Morgan Inv. Mgt. Inc., 78 AD3d 562; Castellano v Young & Rubicam, Inc., 257 F3d 171; Guice v Charles Schwab & Co., 89 NY2d 31; Monfort v Larson, 257 AD2d 261; Merrill Lynch, Pierce, Fenner & Smith Inc. v Dabit, 547 US 71; Kirschner v KPMG LLP, 15 NY3d 446.)

      Wollmuth Maher & Deutsch LLP, New York City (William A. Maher, Vincent T. Chang, Randall R. Rainer, Michael P. Burke and John E. Lazar of counsel), for respondent.
    I. Statutory preemption of common-law claims requires “clear and specific legislative intent.” (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Candee v Hayward, 37 NY 653; Matter of ATM One v Landaverde, 2 NY3d 472; Majewski v Broadalbin-Perth Cent. School Dist, 91 NY2d 577; Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205; Hechter v New York Life Ins. Co., 46 NY2d 34; Matter of Sullivan Co., 289 NY 110; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200; Morris v Snappy Car Rental, 84 NY2d 21.) II. There is no uniform “rule of preemption” under the Martin Act. (Horn v 440 E. 57th Co., 151 AD2d 112; Eagle Tenants Corp. v Fishbein, 182 AD2d 610; Rego Park Gardens Owners v Rego Park Gardens Assoc., 191 AD2d 621; Breakwaters Townhomes Assn. of Buffalo v Breakwaters of Buffalo, 207 AD2d 963; CMMF, LLC v J.P. Morgan Inv. Mgt. Inc., 78 AD3d 562; Bhandari v Ismael Leyva Architects, P.C., 84 AD3d 607; Silver Oak Capital L.L.C. v UBS AG, 82 AD3d 666; Board of Mgrs. of Marke Gardens

      Condominium, v 240/242 Franklin Ave., LLC, 71 AD3d 935; Caboara v Babylon Cove Dev., LLC, 54 AD3d 79; Scalp & Blade v Advest, Inc., 281 AD2d 882.) III. There is no legislative acquiescence. (Mountain View Coach Lines v Storms, 102 AD2d 663; Reyes v Sanchez-Pena, 191 Misc 2d 600; Roberts v Tishman Speyer Props., L.P., 13 NY3d 270; Clark v Cuomo, 66 NY2d 185; United States v Price, 361 US 304; Brown v Gardner, 513 US 115; O'Melveny & Myers v FDIC, 512 US 79; Camps Newfound/ Owatonna, Inc. v Town of Harrison, 520 US 564; California Div. of Labor Standards Enforcement v Dillingham Constr., N. A., Inc., 519 US 316; Jones v Rath Packing Co., 430 US 519.) IV Public policy does not favor preemption of common-law claims. (People v Federated Radio Corp., 244 NY 33; Dunham v Ottinger, 243 NY 423; Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Sprietsma v Mercury Marine, 537 US 51; Humana Inc. v Forsyth, 525 US 299; Green v Fund Asset Mgt., L.P., 245 F3d 214.)

      Eric T. Schneiderman, Attorney General, New York City (Richard Dearing, Barbara D. Underwood and Alison J. Nathan of counsel), for Attorney General of the State of New York, amicus curiae.
    I. The Martin Act does not preempt independent common-law causes of action in the area of securities. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; Hechter v New York Life Ins. Co., 46 NY2d 34; ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208; CPC Intl. v McKesson Corp., 70 NY2d 268; Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236; Board of Mgrs. of Marke Gardens Condominium v 240/242 Franklin Ave., LLC, 71 AD3d 935; Scalp & Blade v Advest, Inc., 281 AD2d 882; Richards v Kaskel, 32 NY2d 524; Brooklyn Union Gas Co. v New York State Human Rights Appeal Bd., 41 NY2d 84; Clark v Cuomo, 66 NY2d 185.) II. There is no basis for distinguishing between common-law actions that require scienter and those that do not for purposes of preemption. (CPC Intl. v McKesson Corp., 70 NY2d 268; Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354; Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236; Whitehall Tenants Corp. v Estate of Olnick, 213 AD2d 200; Horn v 440 E. 57th Co., 151 AD2d 112; Eagle Tenants Corp. v Fishbein, 182 AD2d 610; Board of Mgrs. of Marke Gardens Condominium v 240/242 Franklin Ave., LLC, 71 AD3d 935; Meinhard v Salmon, 249 NY 458; Colburn v Morton, 3 Keyes 296; Brewster v Hatch, 122 NY 349.) III. Defendants’ policy argument for preemption is misconceived. (Anwar v

      Fairfield Greenwich Ltd., 728 F Supp 2d 354; CPC Intl. v McKesson Corp., 70 NY2d 268; Roni LLC v Arfa, 72 AD3d 413.) IV The lower courts in Roni LLC v Arfa (72 AD3d 413 [2010]) erroneously narrowed the scope of the Martin Act. (People v Lavrowsky, 3 Misc 2d 600; People v Abbott, 4 Misc 2d 565; People v Ruthven, 160 Misc 112; People v Landes, 84 NY2d 655; Black Riv. Assoc. v Newman, 218 AD2d 273; Fraternity Fund Ltd. v Beacon Hill Asset Mgt. LLC., 376 F Supp 2d 385; Lehman Bros. Commercial Corp. v Minmetals Intl. Non-Ferrous Metals Trading Co., 179 F Supp 2d 159.)

      Lisa A. Catalano, Securities Arbitration Clinic, St. John’s University School of Law, Jamaica and Law Offices of Timothy J. O’Connor, Albany (Timothy J. O’Connor of counsel), for Public Investors Arbitration Bar Association, amicus curiae.
    I. This Court’s recent decision in ABN AMRO Bank, N.V. v MBIA Inc. (17 NY3d 208 [2011]) and public policy militate in favor of a finding of no preemption of non-fraud common-law tort claims. (Scott v Dime Sav. Bank of N.Y., FSB, 886 F Supp 1073; United States v Skelly, 442 F3d 94; de Kwiatkowski v Bear, Stearns & Co., Inc., 306 F3d 1293; McDaniel v Bear Stearns & Co., Inc., 196 F Supp 2d 343; Siedman v Merrill Lynch, Pierce, Fenner & Smith, Inc., 465 F Supp 1233; Shearson/American Express Inc. v McMahon, 482 US 220; Matter of Smith Barney, Harris Up-ham & Co. v Luckie, 85 NY2d 1033; Singer v Jefferies & Co., 78 NY2d 76; Ozelkan v Tyree Bros. Envtl. Servs., Inc., 29 AD3d 877; State St. Trust Co. v Ernst, 278 NY 104.) II. The claimed preemption by the Martin Act of civil claims by private investors is repugnant to article I, § 14 and article VI, § 7 (a) of the New York Constitution. (Montgomery v Daniels, 38 NY2d 41; Matter of Steinway, 159 NY 250; Woods v Lancet, 303 NY 349; Boddie v Connecticut, 401 US 371; Sohn v Calderon, 78 NY2d 755; Thrasher v United States Liab. Ins. Co., 19 NY2d 159; Richards v Kaskel, 32 NY2d 524; Matter of Zuckerman v Board of Educ. of City School Dist. of City of N.Y., 44 NY2d 336.)

      William A. Jacobson, Cornell Securities Law Clinic, Ithaca, for Cornell Securities Law Clinic, amicus curiae.
    I. The legislative history reveals an intent to supplement, not preempt, the common law. (Rankin v Shanker, 23 NY2d 111; Hotaling v Leach & Co., Inc., 126 Misc 845; 42nd St. Fotoshop v Weimet Film Co., 286 App Div 714; Mekrut v Gould, 16 Misc 2d 326; ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208.) II. The Martin Act text contains no clear and specific intent to preempt the common law. (Burns Jackson Miller Summit & Spitzer v

      Lindner, 59 NY2d 314; Hechter v New York Life Ins. Co., 46 NY2d 34; People v Finley, 10 NY3d 647; Matter of Crucible Materials Corp. v New York Power Auth., 13 NY3d 223; Seligman v Friedlander, 199 NY 373; Hennessy v Walker, 279 NY 94; Transit Commn. v Long Is. R.R. Co., 253 NY 345; Hammelburger v Foursome Inn Corp., 54 NY2d 580; Matter of Delmar Box Co. [Aetna Ins. Co.], 309 NY 60.) III. New York courts have correctly ruled against Martin Act preemption. (CMMF, LLC v J.P Morgan Inv. Mgt. Inc., 78 AD3d 562; Caboara v Babylon Cove Dev., LLC, 54 AD3d 79; Scalp & Blade v Advest, Inc., 281 AD2d 882; Independent Order of Foresters v Donaldson, Lufkin & Jenrette Inc., 919 F Supp 149; Castellano v Young & Rubicam, Inc., 257 F3d 171; Louros v Kreicas, 367 F Supp 2d 572; Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354; CPC Intl. v McKesson Corp., 70 NY2d 268; Whitehall Tenants Corp. v Estate of Olnick, 213 AD2d 200; Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236.)

      Milberg LLP, New York City (Robert A. Wallner and Jennifer L. Young of counsel), for New York State AFL-CIO and others, amici curiae.
    I. Nothing in the Martin Act or its legislative history supports preemption of common-law claims. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208.) II. That the Martin Act does not preempt common-law fraud claims, which are well within its scope, further demonstrates that the instant common-law claims are likewise not preempted. (Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236; Roni LLC v Arfa, 74 AD3d 442; Bhandari v Ismael Leyva Architects, P.C., 84 AD3d 607; People v Sala, 95 NY2d 254; Sykes v RFD Third Ave. 1 Assoc., LLC, 15 NY3d 370; CRT Invs., Ltd. v BDO Seidman, LLP, 85 AD3d 470; Silver Oak Capital L.L.C. v UBS AG, 82 AD3d 666; Jordan v UBS AG, 11 AD3d 283.) III. J.P. Morgan Investment Management Inc.’s reliance on federal preemption law undermines its argument. (Merrill Lynch, Pierce, Fenner & Smith Inc. v Dabit, 547 US 71; In re Beacon Assoc. Litig., 745 F Supp 2d 386; Silver Oak Capital L.L.C. v UBS AG, 82 AD3d 666; CMMF, LLC v J.P. Morgan Inv. Mgt. Inc., 78 AD3d 562; Board of Mgrs. of Marke Gardens Condominium v 240/242 Franklin Ave., LLC, 71 AD3d 935; Caboara v Babylon Cove Dev., LLC, 54 AD3d 79, 82 AD3d 1141; Scalp & Blade v Advest, Inc., 281 AD2d 882; Castellano v Young & Rubicam, Inc., 257 F3d 171; Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354; Matter of Pokoik v Department of Health Servs., County of Suffolk, 72 NY2d 708.) IV The Court should grant deference to the Attorney General’s views. (Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 62 NY2d 539; Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354; South Cherry St., LLC v Hennessee Group LLC, 573 F3d 98; Stephenson v PricewaterhouseCoopers, LLP, 768 F Supp 2d 562.)

      Wilmer Cutler Pickering Hale and Dorr, LLP, New York City (Lori A. Martin of counsel), and Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C. (Paul R.Q. Wolf son and Daniel S. Volchok of counsel), for Securities Industry and Financial Markets Association and others, amici curiae.
    I. A ruling that private non-scienter-based claims can go forward would constitute a significant change in the law, with potentially far-reaching consequences best considered by the Legislature. II. Investment advice and management are not activities readily susceptible to evaluation under a reasonableness standard. (Mangam v Brooklyn City R.R. Co., 38 NY 455; People v Grogan, 260 NY 138; Danielenko v Kinney Rent A Car, 57 NY2d 198.) III. Allowing non-fraud claims against investment advisers will lead to increased costs for clients. IV Gross negligence and breach of fiduciary duty claims against investment advisers would be as problematic as ordinary negligence claims. (Dalton v Hamilton Hotel Operating Co., 242 NY 481; Steamboat New World v King, 16 How [57 US] 469; Food Pageant v Consolidated Edison Co., 54 NY2d 167; Andre v Pomeroy, 35 NY2d 361.)

      Lowey Dannenberg Cohen & Hart, P.C., White Plains (Barbara J. Hart, Thomas M. Skelton and Jeanne D’Esposito of counsel), for New York State Common Retirement Fund and others, amici curiae.
    I. There is no basis for preemption of common-law claims under the Martin Act. (Scalp & Blade v Advest, Inc., 281 AD2d 882; Caboara v Babylon Cove Dev., LLC, 54 AD3d 79; Board of Mgrs. of Marke Gardens Condominium v 240/242 Franklin Ave., LLC, 71 AD3d 935; United States v Texas, 507 US 529; Hechter v New York Life Ins. Co., 46 NY2d 34; Isbrandtsen Co. v Johnson, 343 US 779; Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314; American Telephone & Telegraph Co. v Central Office Telephone, Inc., 524 US 214; United States v Detroit Timber & Lumber Co., 200 US 321; CPC Intl. v McKesson Corp., 70 NY2d 268.) II. Public policy considerations weigh against preemption. (Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354; Belco Petroleum Corp. v AIG Oil Rig, 164 AD2d 583; Sprietsma v Mercury Marine, 537 US 51; Humana Inc. v Forsyth, 525 US 299; Bateman Eichler, Hill Richards, Inc. v Berner, 472 US 299; Koppel v 4987 Corp., 167 F3d 125; Kahan v

      Rosenstiel, 424 F2d 161.) III. Preemption creates unnecessary barriers to recovery for the New York State Common Retirement Fund, the New York City Pension Funds and the New York State Teachers’ Retirement System and other investors. (In re Beacon Assoc. Litig., 745 F Supp 2d 386.) IV There is no basis to conclude that allowing common-law claims would result in a proliferation of meritless lawsuits. V Proposed legislation does not evidence legislative acquiescence. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314.)
   OPINION OF THE COURT

Graffeo, J.

At issue on this appeal is whether the Martin Act (General Business Law art 23-A) preempts plaintiffs common-law causes of action for breach of fiduciary duty and gross negligence. For the reasons that follow, we conclude that plaintiffs common-law claims are not preempted.

Plaintiff Assured Guaranty (UK) Ltd. commenced this action against defendant J.P Morgan Investment Management Inc., asserting causes of action for breach of fiduciary duty, gross negligence and breach of contract. The gravamen of the complaint is that J.P. Morgan mismanaged the investment portfolio of an entity—Orkney Re II PLC—whose obligations plaintiff guaranteed.

As an express third-party beneficiary of an investment management agreement between J.P. Morgan and Orkney, plaintiff alleges that J.P Morgan invested Orkney’s assets heavily in high-risk securities, such as subprime mortgage-backed securities, and failed to diversify the portfolio or advise Orkney of the true level of risk. The complaint further contends that J.P Morgan improperly made investment decisions in favor of nonparty Scottish Re Group Ltd., a client of J.P Morgan and Orkney’s largest equity holder, rather than for the benefit of Orkney or plaintiff. As a consequence, the complaint claims that Orkney suffered substantial financial losses, triggering plaintiffs obligation to pay under its guarantee.

J.P Morgan moved to dismiss the complaint pursuant to CPLR 3211. As relevant here, J.P Morgan argued that the breach of fiduciary duty and gross negligence claims were preempted by the Martin Act. Supreme Court granted the motion and dismissed the complaint in its entirety .(28 Misc 3d 1215[A], 2010 NY Slip Op 51362[U] [2010]). The court held that the breach of fiduciary duty and gross negligence claims fell “within the purview of the Martin Act and their prosecution by plaintiff would be inconsistent with the Attorney General’s exclusive enforcement powers under the Act” (2010 NY Slip Op 51362[U], *5).

The Appellate Division modified by reinstating the breach of fiduciary duty and gross negligence causes of action and part of the contract claim (80 AD3d 293 [1st Dept 2010]). In reinstating the two tort claims, the Appellate Division concluded that “there is nothing in the plain language of the Martin Act, its legislative history or appellate level decisions in this state that supports defendant’s argument that the Act preempts otherwise validly pleaded common-law causes of action” (id. at 304). The Appellate Division granted J.P. Morgan leave to appeal on a certified question (2011 NY Slip Op 64361[U] [2011]), and we now affirm.

J.P. Morgan’s position can be simply stated—plaintiff’s common-law breach of fiduciary duty and gross negligence claims must be dismissed because they are preempted by the Martin Act. Contending that the Martin Act vests the Attorney General with exclusive authority over fraudulent securities and investment practices addressed by the statute, J.P. Morgan asserts that it would be inconsistent to allow private investors to bring overlapping common-law claims. J.P. Morgan cites our decisions in CPC Intl. v McKesson Corp. (70 NY2d 268 [1987]) and Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership (12 NY3d 236 [2009]) in support of its contention that the Martin Act abrogated all nonfraud common-law claims. Flaintiff, joined by various amici curiae, including the New York Attorney General, counters that neither the language nor the history of the Martin Act requires preemption. Flaintiff also asserts that CPC Intl. and Kerusa favor its interpretation of the statute— common-law claims not predicated exclusively on violations of the Martin Act may proceed in private actions.

The Martin Act—New York’s “blue sky” law—“authorizes the Attorney General to investigate and enjoin fraudulent practices in the marketing of stocks, bonds and other securities within or from New York” (Kerusa, 12 NY3d at 243, citing General Business Law §§ 352, 353). We have observed that the Martin Act was enacted “to create a statutory mechanism in which the Attorney-General would have broad regulatory arid remedial powers to prevent fraudulent securities practices by investigating and intervening at the first indication of possible securities fraud on the public and, thereafter, if appropriate, to commence civil or criminal prosecution” (CPC Inti., 70 NY2d at 277; see also Kralik v 239 E. 79th St. Owners Corp., 5 NY3d 54, 58-59 [2005]).

When the Martin Act was originally adopted in 1921, “the primary weapon afforded to the Attorney General to combat securities fraud was that of injunctive relief’ (Mihaly and Kaufmann, Securities, Commodities and Other Investments, McKinney’s Cons Laws of NY, Book 19, General Business Law art 23-A, at 13; see also General Business Law § 353 [1]). The Act has since been amended on a number of occasions to broaden its reach. In 1955, for example, the Legislature added section 352-c, which allowed the Attorney General to bring criminal proceedings against those engaging in fraudulent practices “even absent proof of scienter or intent” (People v Landes, 84 NY2d 655, 660 [1994]). Analogously, in contrast to a common-law fraud claim, the Attorney General “need not allege or prove either scienter or intentional fraud” in a civil enforcement action under the Martin Act (State of New York v Rachmani Corp., 71 NY2d 718, 725 n 6 [1988]). And in 1976, the Attorney General was authorized to seek monetary restitution on behalf of investors who were the victims of fraudulent activities (see General Business Law § 353 [3]).

The scope of the Martin Act was expanded to include the real estate industry in 1960, when the Legislature added section 352-e to address the offer and sale of condominiums and cooperative apartments. The goal of this amendment was to prevent fraud in the sale and transfer of such properties. Consequently, “[t]he Martin Act makes it illegal for a person to make or take part in a public offering of securities consisting of participation interests in real estate unless an offering statement is filed with the Attorney General” and numerous disclosures are made pursuant to the statute and its implementing regulations (Kerusa, 12 NY3d at 243).

Legislative intent is integral to the question of whether the Martin Act was intended to supplant nonfraud common-law claims. It is well settled that “when the common law gives a remedy, and another remedy is provided by statute, the latter is cumulative, unless made exclusive by the statute”. (Burns Jackson Miller Summit & Spitzer v Lindner, 59 NY2d 314, 324 [1983] [internal quotation marks and citation omitted]). We have emphasized that “a clear and specific legislative intent is required to override the common law” and that such a prerogative must be “unambiguous” (Hechter v New York Life Ins. Co., 46 NY2d 34, 39 [1978]).

Here, the plain text of the Martin Act, while granting the Attorney General investigatory and enforcement powers and prescribing various penalties, does not expressly mention or otherwise contemplate the elimination of common-law claims (see ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208, 224 [2011] [stating that, if the Legislature intended to extinguish common-law remedies, “we would expect to see evidence of such intent within the statute”]). Certainly the Martin Act, as it was originally conceived in 1921 with its limited relief, did not evince any intent to displace all common-law claims in the securities field. Nor can J.P. Morgan point to anything in the legislative history of the various amendments that demonstrates a “clear and specific” legislative mandate to abolish preexisting common-law claims that private parties would otherwise possess. True, we have held that the Martin Act did not “create” a private right of action to enforce its provisions (see CPC Inti., 70 NY2d at 276-277). But the fact that “no new per se action was contemplated by the Legislature does not. . . require us to conclude that the traditional . . . forms of action are no longer available to redress injury” (Burns Jackson, 59 NY2d at 331). Hence, we agree with plaintiff that the Martin Act does not preclude a private litigant from bringing a nonfraud common-law cause of action.

Despite the absence of an unambiguous legislative intention to bar common-law claims, J.P. Morgan nevertheless posits that our decisions in CPC Intl. and Kerusa settled the issue in favor of preemption. We believe that J.P. Morgan overreads the import of these cases.

In CPC Intl., the plaintiff—a corporation that purchased the stock of another company—brought a “private” Martin Act claim and a common-law fraud cause of action against a number of defendants stemming from the fraudulently inflated price of the stock. Addressing the viability of plaintiffs Martin Act claim, we first observed that the statute did not explicitly authorize a private action. We then concluded that no cause of action was impliedly created by the Martin Act, reasoning:

“[A]n implied private action is not consistent with the legislative scheme underlying the Martin Act and, specifically, section 352-c; . . . the specific purpose of the statute was to create a statutory mechanism in which the Attorney-General would have broad regulatory and remedial powers to prevent fraudulent securities practices by investigating and intervening at the first indication of possible securities fraud on the public and, thereafter, if appropriate, to commence civil or criminal prosecution; and . . . consistency of purpose with the statute includes consistency with this enforcement mechanism” (70 NY2d at 276-277).

However, we did not address whether the Martin Act preempted or abrogated otherwise viable and independent common-law claims. In fact, we addressed plaintiffs common-law fraud cause of action on the merits, finding that it stated a claim and, therefore, withstood a CPLR 3211 motion to dismiss.

In Kerusa, we recently examined whether the purchaser of a condominium apartment could institute a cause of action for common-law fraud “predicated solely on alleged material omissions from the offering plan amendments mandated by the Martin Act . . . and the Attorney General’s implementing regulations” (12 NY3d at 239). According to the complaint in Kerusa, the defendants—the sponsor of the condominium and other related parties—had failed to “disclose various construction and design defects in the offering plan amendments” filed with the Attorney General pursuant to the Martin Act (id. at 245). We were careful to make clear that “[b]ut for the Martin Act and the Attorney General’s implementing regulations, however, the sponsor defendants did not have to make the disclosures in the amendments” (id.). Put differently, the purchaser’s entire claim was premised on a violation of the Martin Act and would not have existed absent the statute. Under these discrete circumstances, we held that the purchaser could not bring a fraud claim because to accept the “pleading as valid would invite a backdoor private cause of action to enforce the Martin Act in contradiction to our holding in CPC Intl. that no private right to enforce that statute exists” (id.).

Read together, CPC Intl. and Kerusa stand for the proposition that a private litigant may not pursue a common-law cause of action where the claim is predicated solely on a violation of the Martin Act or its implementing regulations and would not exist but for the statute. But, an injured investor may bring a common-law claim (for fraud or otherwise) that is not entirely dependent on the Martin Act for its viability. Mere overlap between the common law and the Martin Act is not enough to extinguish common-law remedies.

Finally, J.P Morgan claims that policy considerations, including the preservation of the Attorney General’s exclusive enforcement authority under the Martin Act, should encourage us to find expansive preemption in the securities and real estate fields. To the contrary, we believe that policy concerns militate in favor of allowing plaintiffs common-law claims to proceed. We agree with the Attorney General that the purpose of the Martin Act is not impaired by private common-law actions that have a legal basis independent of the statute because proceedings by the Attorney General and private actions further the same goal—combating fraud and deception in securities transactions. Moreover, as Judge Marrero observed recently, to hold that the Martin Act precludes properly pleaded common-law actions would leave the marketplace “less protected than it was before the Martin[ ] Act[’s] passage, which can hardly have been the goal of its drafters” (Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354, 371 [SD NY 2010]).

For all of these reasons, we conclude that plaintiffs breach of fiduciary duty and gross negligence claims are not barred by the Martin Act.

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

Chief Judge Lippman and Judges Cipabick, Read, Pigott and Jones concur; Judge Smith taking no part.

Order affirmed, etc.

      . J.P. Morgan takes no position on the Appellate Division’s reinstatement of the breach of contract claim and, therefore, we have no occasion to address it on this appeal.

      . After we decided CPC Inti., some courts held that the Martin Act preempts nonfraud common-law claims if the subject of the claim is “covered” by the statute (see e.g. Stephenson v Citco Group Ltd., 700 F Supp 2d 599, 612-618 [SD NY 2010]; Granite Partners, L.P. v Bear, Stearns & Co. Inc., 17 F Supp 2d 275, 291-292 [SD NY 1998]; Independent Order of Foresters v Donaldson, Lufkin & Jenrette Inc., 919 F Supp 149, 153-154 [SD NY 1996]; see also Castellano v Young & Rubicam, Inc., 257 F3d 171, 190 [2d Cir 2001]). The rationale typically employed by these cases is that fraud necessitates evidence of deceitful intent, an element not required by the Martin Act, whereas other common-law claims such as breach of fiduciary duty and gross negligence do not require such proof, and to recognize such claims would be analogous to permitting a private right of action under the Act, in contravention of CPC Intl. (see Stephenson, 700 F Supp 2d at 613 [“Martin Act preemption does not extend to those common law claims that require additional elements beyond what is required for Martin Act liability, such as common law fraud claims that require a showing of intent”]). More recently, however, a number of courts have rejected this approach, concluding that the Martin Act does not preclude nonfraud tort claims (see e.g. CMMF, LLC v J.P. Morgan Inv. Mgt. Inc., 78 AD 3d 562, 564 [1st Dept 2010]; Board of Mgrs. of Marke Gardens Condominium v 240/242 Franklin Ave., LLC, 71 AD3d 935, 936 [2d Dept 2010]; Anwar v Fairfield Greenwich Ltd., 728 F Supp 2d 354, 357-358 [SD NY 2010]; see also Scalp & Blade v Advest, Inc., 281 AD2d 882, 883 [4th Dept 2001]). We believe that these latter cases represent the more accurate view.


source: Caselaw Access Project

author: Pigott, J.

license: Public Domain

text:
    [962 NE2d 247, 938 NYS2d 826]
    Board of Education of the Garrison Union Free School District, Respondent, v Greek Archdiocese Institute of St. Basil, Also Known as St. Basil Academy, Appellant, et al., Defendants.
    Argued November 15, 2011;
    decided January 5, 2012

      POINTS OF COUNSEL

      Kramer Levin Naftalis & Frankel LLP, New York City (Gregory A. Horowitz, Julie M. Weiswasser and Alissa R. Goodman of counsel), for appellant.
    I. Education Law § 4002 compels Garrison Union Free School District to provide free and appropriate public education to children residing at the Greek Archdiocese Institute of St. Basil. (Campaign for Fiscal Equity v State of New York, 86 NY2d 307; Board of Educ., Levittown Union Free School Dist. v Nyquist, 57 NY2d 27; Campaign for Fiscal Equity v State of New York, 100 NY2d 893; Plyler v Doe, 457 US 202.) II. Education Law § 3202 does not govern this matter. (People v Mobil Oil Corp., 48 NY2d 192.) III. The Commissioner of Education recognized that Education Law § 3202 would not govern after the Greek Archdiocese Institute of St. Basil received its license. IV Education Law § 4004 does not limit the Greek Archdiocese Institute of St. Basil children’s right to free education. (Board of Educ., Levittown Union Free School Dist. v Nyquist, 57 NY2d 27.) V Longwood Cent. School Dist. v Springs

      Union Free School Dist. (1 NY3d 385 [2004]) does not govern this matter.

      Girvin & Ferlazzo, P.C., Albany (Salvatore D. Ferlazzo and Patrick J. Fitzgerald of counsel), for respondent.
    I. Garrison Union Free School District is obligated to enroll children residing at St. Basil Academy only on a tuition basis and after other reasonable conditions have been met. (Longwood Cent. School Dist. v Springs Union Free School Dist., 1 NY3d 385.) II. The operating certificate which St. Basil Academy received from the New York State Department of Social Services does not impose financial obligations on Garrison Union Free School District for the education of children who live at St. Basil Academy. (Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Intl. B.V. v Schreiber, 407 F3d 34; Maurizio v Goldsmith, 84 F Supp 2d 455; Wheeler v Citizens Telecom. Co. of N.Y., Inc., 18 AD3d 1002; People v Rivera, 45 NY2d 989.) III. The legislative history relating to the enactment of Education Law § 3202 (6) unequivocally confirms the statutory interpretation set forth above. (State of New York v Green, 96 NY2d 403.) IV St. Basil Academy misinterprets the provisions of article 81 of the Education Law. V The Commissioner of Education’s decisions that Garrison Union Free School District is not responsible for the cost of educating children who live at St. Basil Academy should be afforded great weight and deference. (Board of Educ. of Lawrence Union Free School Dist. No. 15, Town of Hempstead v McColgan, 18 Misc 3d 572; Matter of Kelley v Ambach, 83 AD2d 733; Matter of Lezette v Board of Educ., Hudson City School Dist., 35 NY2d 272.) VI. St. Basil Academy’s own actions and representations undermine its argument. (Matter of J-T Assoc. v Hudson Riv.—Black Riv. Regulating Dist., 175 AD2d 438; Matter of Estate of Prospect v New York State Teachers’ Retirement Sys., 13 AD3d 699.)
   OPINION OF THE COURT

Pigott, J.

This appeal presents the question of whether a school district is obligated to pay for the educational costs of the children living in a child care institution located within district boundaries. We hold that a school district is not obligated to provide a tuition-free education to those children determined to be nonresidents of the school district.

The Greek Archdiocese Institute of St. Basil (hereinafter St. Basil) is located within the boundaries of the Garrison Union Free School District and houses primarily Greek Orthodox children whose parents are unable to care for them due to circumstances such as death, abuse, neglect, disability or poverty. The children are typically placed at the initiative of priests in parishes across the United States, sometimes accompanied by family court orders. St. Basil does not always obtain custody or guardianship status over the children.

There has been a long-standing dispute over who bears the burden of paying the educational costs for the children at St. Basil. Over 25 years ago, St. Basil and Garrison settled a lawsuit by way of an agreement providing that St. Basil would pay the Garrison school district all charges for tuition and any other costs incidental to the education of all students residing at St. Basil whose parents were not residents of the school district. Since that time and until 2002, St. Basil either educated the children at a boarding school it operated at its residential facility or sent the children to public schools in neighboring school districts or private schools on a tuition-paying basis.

In September 2002, St. Basil attempted to register 26 school-aged children in the Garrison school district on a tuition-free basis. Garrison scheduled a residency hearing before an appointed hearing officer pursuant to section 100.2 (y) of the Regulations of the Commissioner of Education of the State of New York (8 NYCRR) to determine its obligations. In November 2002, the Hearing Officer determined that none of the students were residents of the Garrison school district and therefore they were not permitted to attend the school on a tuition-free basis. St. Basil appealed that determination to the Commissioner of Education.

The Commissioner affirmed the Hearing Officer’s decision. In doing so, the Commissioner explained that article 81 of the Education Law did not apply because St. Basil was not a “child care institution” since it was not licensed by the New York State Office of Children and Family Services (OCFS). At the time, St. Basil’s licensure was pending with OCFS. The Commissioner concluded that the default statute, Education Law § 3202 (6), applied, and under that statute a child’s residence is presumed to be that of his or her parents unless the parents relinquished total custody and control. Because there was “insufficient evidence” to establish that the parents relinquished permanent custody and control to St. Basil, that residency presumption was not rebutted. Thus, the Commissioner held that the children living at St. Basil who attend Garrison school district must do so on a tuition-paying basis. The Commissioner further held that if the parents (or guardians) of the children resided in New York, the expense should be covered by the school district of the parent’s residence. In other words, Garrison school district was obligated to educate the children only if St. Basil or some other entity or individual assumed financial responsibility for tuition. Neither St. Basil nor Garrison appealed the Commissioner’s determination.

In September 2003, St. Basil submitted an application for a certificate to operate a residential care program for children pursuant to Social Services Law § 460-b. The regulations required St. Basil to submit an educational plan showing that it would take the necessary steps to ensure that the children living at the institution receive an education in accordance with the requirements of the Education Law (see 18 NYCRR 441.13 [a]). In its education plan, St. Basil stated that “[a]fter the completion of the 2004-2005 school year ... St. Basil will pay the tuition for its students to continue to attend [schools outside Garrison school district] unless the Commissioner of Education determines that Garrison is responsible for those charges.” On November 10, 2006, St. Basil was issued a license to operate a residential child care institution.

Thereafter, Garrison commenced the instant action seeking, among other things, a judgment declaring that St. Basil’s status as a licensed child care institution did not mean that Garrison was now required to pay for the education costs of the children at St. Basil who were not residents of the school district. St. Basil responded by filing counterclaims, which, among other things, sought a declaration that Garrison was obligated to provide a cost-free education to all children placed at St. Basil and that St. Basil is not responsible for paying the tuition of its nonresident children. After motion practice not relevant to this appeal, St. Basil and Garrison each moved for summary judgment on their claims for declaratory relief.

Supreme Court found that Garrison was not responsible for the cost of educating the children living in St. Basil who are not residents of the Garrison school district as defined by Education Law § 3202. The Appellate Division affirmed (75 AD3d 569 [2d Dept 2010]) and certified the following question to this Court: “Was the decision and order of this Court dated July 20, 2010, properly made?”

St. Basil argues that the rights of the children are established by Education Law § 4002, which compels Garrison to provide free and appropriate education to all of the children residing at St. Basil. Garrison counters that section 4002 must be read in conjunction with Education Law § 3202, which provides that the school district of a child’s residence—and not the school district where the child care institution is located—is financially responsible for the cost of educating a child living at a child care institution.

We begin our analysis with the general statute, Education Law § 3202, which is entitled “Public schools free to resident pupils; tuition from nonresident pupils.” The statute “sets out the framework for determining when and under what circumstances a school district is obligated to provide free education” (Catlin v Sobol, 77 NY2d 552, 559 [1991]). It is “designed to allocate costs sensibly between school districts and to avert burdening them with the costs of educating nonresident children” (Longwood Cent. School Dist. v Springs Union Free School Dist., 1 NY3d 385, 388-389 [2004]). Section 3202 (1) provides:

“A person over five and under twenty-one years of age who has not received a high school diploma is entitled to attend the public schools maintained in the district in which such person resides without the payment of tuition.”

“Thus, every school district must ‘provide tuition-free education only to students whose parents or legal guardians reside within the district’ ” (Longwood, 1 NY3d at 389, quoting Appeal of Stokes, 32 Ed Dept Rep 93, 94 [Decision No. 12,769] [1992]).

Neither party disputes that section 3202 requires the Garrison school district to provide a tuition-free education to those children living at St. Basil who qualify as residents of the district. St. Basil argues, however, that since it received its license to be a “child care institution,” article 81 of the Education Law (Education Law § 4001 et seq.), and not Education Law § 3202, applies to all of the nonresident children living at St. Basil. Thus, under article 81, St. Basil claims, all children residing in child care institutions, whether their school district of residence is in-state or out-of-state, are entitled to tuition-free education at the expense of the local school district. Therefore, St. Basil argues Garrison is required to accept all of its children on a tuition-free basis.

Education Law article 81 provides that every child between the ages of 5 and 21 residing in a child care institution is entitled “to receive a free and appropriate education in the least restrictive environment for that child” (Education Law § 4002 [1]). It further requires that each child be “provided suitable educational services in the least restrictive environment” and lists suitable programs for accomplishing this task including “[t]he program of the public schools . . . where such child care institution is located or a neighboring public school program” (§ 4002 [2], [2] [a]). It does not fully address who bears the cost of that education.

St. Basil’s argument is that the educational rights of the children at St. Basil are determined exclusively by article 81, which compels Garrison to provide “a free and appropriate education” to the children residing there. It contends that article 81 “addresses a special case where children’s rights are not subject to the residency requirements of § 3202.” We disagree.

Article 81 must be read in conjunction with Education Law § 3202, which provides that the school district of a child’s residence is financially responsible for the cost of educating a child. Although the statutory language of Education Law § 3202 (6) states that it gives way to the provisions of article 81, it does so only to the extent to which article 81 expressly supercedes its provisions. Thus, the residency provisions of section 3202 must apply because article 81 does not adequately address who is responsible for paying the cost of the required “free and appropriate” education. A reading of the statutory provisions of article 81 reveals that the Legislature did not intend to put the financial burden on the local school district for all of the children living in a child care institution. For instance, the statute provides that the local school district may seek tuition reimbursement for children who are residents of the state and who are placed in child care institutions by government entities such as a social services district, the Division for Youth, or the Family Court (see Education Law § 4004 [2] [a]). Throughout the Education Law, the relevant provisions addressing who is the financially responsible party emphasize the residence of the parents or the responsibility of the entity or agency placing the child in the institution.

Indeed, as we previously recognized in Longwood Cent. School Dist. v Springs Union Free School Dist. (1 NY3d 385 [2004]), the purpose of the Education Law was “to distribute fairly the costs of education among school districts” and to “ ‘relieve school districts of the obligation which exists in certain cases ... to bear the financial burden of educating nonresident children’ ” (id. at 389, quoting State Ed Dept Mem, Bill Jacket, L 1973, ch 867, at 6).

St. Basil is an “institution for the care, custody and treatment of children” and the Education Law specifies that children living in such institutions are not deemed residents of the school district in which the institution is located purely by reason of their presence in the institution (Education Law § 3202 [6]). The issuance of a license to operate a child care institution does not change the residence of the children living there. Further, there is nothing to suggest that the Legislature intended the local school district to bear the entire financial burden for those children living in a child care institution, particularly those having a different residential district or those who are placed from a different state. Garrison school district is therefore not responsible for the costs of educating those children from St. Basil who are determined to be nonresidents of the Garrison school district.

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

Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Smith and Jones concur.

Order affirmed, etc.


author: Ciparick, J. Smith, J. (dissenting).

text:
    [962 NE2d 773, 939 NYS2d 282]
    Jose Luis Toledo, as Administrator of the Estate of Joaquin Martinez, Also Known as Joaquin Martinez Vargas, Deceased, Respondent, v Iglesia Ni Christo, Appellant.
    Argued November 14, 2011;
    decided January 10, 2012

      POINTS OF COUNSEL

      Mauro Lilling Naparty LLP, Great Neck (Richard J. Montes, Caryn L. Lilling and Matthew W. Naparty of counsel), and Congdon, Flaherty, O’Callaghan, Reid, Donlon, Travis & Fish-linger for appellant.
    I. In a wrongful death action subject to CPLR article 50-B, future damages discounted to present value as of the date of the verdict should not be further discounted to the date of death such that plaintiff receives additional interest. (Milbrandt v Green Refractories Co., 79 NY2d 26; Woodling v Garrett Corp., 813 F2d 543; Shu-Tao Lin v McDonnell Douglas Corp., 742 F2d 45; Bryant v New York City Health & Hosps. Corp., 93 NY2d 592.) II. No valid compensatory purpose is served by allowing preverdict interest on future damages from the date of death, since these damages would not have been due and owing as of the date of death if the decedent had survived. (Love v State of New York, 78 NY2d 540; Oiness v Walgreen Co., 88 F3d 1025; Borges v Our Lady of the Sea Corp., 935 F2d 436; Martin v Walk, Haydel & Assoc., Inc., 794 F2d 209; Valley Line Co. v Ryan, 771 F2d 366; Rohring v City of Niagara Falls, 84 NY2d 60; Milbrandt v Green Refractories Co., 79 NY2d 26; Pay v State of New York, 87 NY2d 1011; Desiderio v Ochs, 100 NY2d 159.)

      Edelman & Edelman, P.C., New York City (David M. Schuller of counsel), for respondent.
    Preverdict interest is properly awarded on future wrongful death damages, provided that such future damages are discounted back to the date of death before interest is calculated. (Milbrandt v Green Refractories Co., 79 NY2d 26; Rohring v City of Niagara Falls, 84 NY2d 60; Pay v State of New York, 87 NY2d 1011; Love v State of New York, 78
      NY2d 540; Woodling v Garrett Corp., 813 F2d 543; Shu-Tao Lin v McDonnell Douglas Corp., 742 F2d 45; Equal Empl. Opportunity Commn. v County of Erie, 751 F2d 79; Action S.A. v Marc Rich & Co., Inc., 951 F2d 504; Jones & Laughlin Steel Corp. v Pfeifer, 462 US 523; Krumenacker v Gargano, 276 AD2d 750.)

      McGaw, Alventosa & Zajac, Jericho (Andrew Zajac and Dawn C. DeSimone of counsel), Rona L. Platt, Uniondale, Brendan T. Fitzpatrick, Albertson, David Hamm, New York City, and Lawton W. Squires for Defense Association of New York, Inc., amicus curiae.
    The methodology adopted by the courts below allows for an impermissible double recovery. (Pay v State of New York, 87 NY2d 1011; Rohring v City of Niagara Falls, 84 NY2d 60; Milbrandt v Green Refractories Co., 79 NY2d 26; Woodling v Garrett Corp., 813 F2d 543; Shu-Tao Lin v McDonnell Douglas Corp., 742 F2d 45.)
   OPINION OF THE COURT

Ciparick, J.

The sole issue on this appeal is whether the trial court, in awarding preverdict interest, properly discounted future wrongful death damages back to the date of decedent’s death and awarded interest from the date of death to the date of verdict. We agree with the courts below and affirm the judgment as entered. We do not reach the question of whether the interest should have been added to the future damages award discounted to the date of verdict or added to the award discounted to the date of death as that issue is not before us.

Decedent Joaquin Martinez Vargas was killed in a construction accident on September 21, 2002. Plaintiff Jose Luis Toledo, the administrator of decedent’s estate, brought this negligence and wrongful death action against defendant church. Supreme Court granted summary judgment on the issue of liability on August 14, 2006. In November 2007, a jury trial was held to determine both past and future damages. Supreme Court instructed the jury to “determine the economic value of Joaquin Martinez to Claudia Vera [decedent’s wife], Henri Hernán Martinez, and Christopher Martinez [decedent’s children] on September 21, 2002, the date on which Mr. Martinez died.”

On December 3, 2007, the jury rendered a verdict awarding plaintiff $150,000 for decedent’s conscious pain and suffering, $310,000 for loss of earnings from date of death to date of verdict, $35,000 for spousal services lost from date of death to date of verdict, $50,000 for loss of parental support for infant Henri from date of death to date of verdict, $15,000 for loss of parental support for infant Christopher from date of death to date of verdict, $2,000,000 for future lost earnings for 27 years, $0 for future lost spousal services, $400,000 for future parental loss for Henri for 16 years and $250,000 for future parental loss for Christopher for 17 years. After post-trial motions, defendant, relying on the testimony of its economist, stipulated to an additional $912,000 for future loss of spousal services representing 38 years from the date of verdict. The total jury award for future damages was $3,562,000.

Plaintiff submitted a proposed judgment to Supreme Court. That judgment included an award for future damages of $4,295,595 computed as follows: pursuant to CPLR 5041, plaintiff first subtracted the $250,000 lump sum from the jury’s award of future damages of $3,562,000 and then discounted that total at a discount rate of approximately 4.33% to the date of verdict, December 3, 2007. The award (less the $250,000 lump sum) discounted back to the date of verdict was $3,104,848. Plaintiff then further discounted the award to the date of decedent’s death, arriving at a value of $2,487,465. Plaintiff then calculated the interest on that discounted amount at the statutory interest rate of 9% from the date of death to the date of verdict (see CPLR 5004). The interest calculated was $1,190,747. Plaintiff then added the amount of the calculated interest from the date of death to the date of verdict to the discounted award as of the date of verdict, arriving at a total future damages award of $4,295,595.

Defendant submitted its own proposed counter-judgment, which neither discounted the verdict back to the date of death nor included any preverdict interest for the future wrongful death award. Supreme Court accepted plaintiffs proposed judgment and signed it on October 23, 2008.

Defendant then moved to resettle the award. Supreme Court denied the motion holding that, in actuality, the motion was one for reargument and that there were no matters of fact or law misapprehended by the court. Defendant appealed the judgment. Prior to the appeal, the parties entered into a stipulation which provided: “The sole issue to be presented on this appeal is the question whether the trial court properly discounted the future wrongful death damages back to the date of death, and awarded interest thereon from the date of death to the date of judgment.” The Appellate Division initially reversed holding that interest on future damages should only have been calculated from the date of the verdict (see Toledo v Iglesia Ni Christo, 71 AD3d 404, 405 [1st Dept 2010]). Upon reargument, the Appellate Division recalled and vacated its decision and, relying on EPTL 5-4.3 and our cases interpreting the statute, namely Milbrandt v Green Refractories Co. (79 NY2d 26 [1992]) and Rohring v City of Niagara Falls (84 NY2d 60 [1994]), held “[w]here as here, the award of future damages was discounted by the court to the date of liability, which is the date of death, the award of interest from that date to the date of judgment was proper” (Toledo v Iglesia Ni Christo, 75 AD3d 436, 436 [1st Dept 2010]). We granted defendant leave to appeal (15 NY3d 713 [2010]) and now affirm.

Defendant argues that our holding in Milbrandt prevents a plaintiff from collecting preverdict interest on future damages in a wrongful death action, because the interest from the date of death to the date of verdict has already been included in the discounted award at the time of the verdict, and that any additional interest would be an impermissible windfall to the plaintiff. Defendant further argues that awarding interest on future damages that have yet to be realized also constitutes an unfair windfall for plaintiff. We disagree.

Wrongful death awards in New York are provided for in the EPTL. Specifically, EPTL 5-4.3, relating to the amount of recovery in a wrongful death action, provides in pertinent part:

“(a) The damages awarded to the plaintiff may be such sum as the jury or, where issues of fact are tried without a jury, the court or referee deems to be fair and just compensation for the pecuniary injuries resulting from the decedent’s death to the persons for whose benefit the action is brought . . . Interest upon the principal sum recovered by the plaintiff from the date of the decedent’s death shall be added to and be a part of the total sum awarded.”

Applying this statute and its predecessor statutes, this Court and the courts below have long held that “prejudgment interest in a wrongful death action is ‘part of the damages’ ” (Davenport v Webb, 11 NY2d 392, 394 [1962], quoting Cleghorn v Ocean Acc. & Guar. Corp., 244 NY 166, 167 [1926]; see also Welsh v Peerless Cas. Co., 8 AD2d 373, 376 [1st Dept 1959]; Ashkenazy v National Union Fire Ins. Co. of Pittsburgh, Pa., 245 AD2d 326, 327 [2d Dept 1997]), and that such interest should run from the date of death to the date of verdict (see Alfieri v Cabot Corp., 17 AD2d 455, 461 [1st Dept 1962] [“interest from the date of the wrongful death is an element of damages”]; see also Duffy v City of New York, 7 AD2d 988, 988 [1st Dept 1959]).

Furthermore, it has long been the rule in New York that the damages on a wrongful death action are due on the date of the death of the plaintiffs decedent (see Radley v Leray Paper Co., 214 NY 32, 36 [1915]; Murmann v New York, New Haven & Hartford R.R. Co., 233 App Div 446, 448 [2d Dept 1931], revd on other grounds 258 NY 447 [1932] [“The damages, theoretically, should have been paid at the time the loss was suffered, to wit, the date of death”]). Future damages are thus a debt owed entirely as of the date of liability—the date of death (see Rohring, 84 NY2d at 69-70)—and such damages award properly should include preverdict interest calculated from the date of death.

Consistent with this analysis, in Milbrandt we ruled “that no preverdict interest should be added to an award for postverdict losses if the award has not been discounted to a time prior to the award” (79 NY2d at 31). There, we observed that since the verdicts in Milbrandt and in the companion case Schmertz v Presbyterian Hosp. in City of N.Y. had not been properly discounted, preverdict interest on future damages awards would have been improper as it would indeed constitute a windfall (see id. at 36). Following the adoption of CPLR articles 50-A and 50-B, however, discounting is performed by the trial court and juries are specifically instructed, pursuant to CPLR 4111 (e), to award a full amount of future damages, without a reduction to present value.

Moreover, in Rohring we stated “that future damages should be discounted to the date of liability, which by statute is the date of death, before interest is calculated on them” (84 NY2d at 69). We now conclude that the proper method for calculating preverdict interest in a wrongful death action is to discount the verdict to the date of liability, i.e., the date of death, and award interest on that amount from the date of death to the date of judgment.

Finally, it should be noted that awarding preverdict interest on future damages to plaintiff is not a penalty against defendant. “The purpose of interest is to require a person who owes money to pay compensation for the advantage received from the use of that money over a period of time” (Manufacturer’s & Traders Trust Co. v Reliance Ins. Co., 8 NY3d 583, 589 [2007]). “[T]he plaintiff has been deprived of the use of money to which he or she was entitled from the moment that liability was determined. That is a loss for which the plaintiff should be compensated” (Love v State of New York, 78 NY2d 540, 545 [1991]). “[A] rule that would permit the defendant to retain the cost of using the money (i.e., interest) would provide the defendant with a windfall” (id. [emphasis added])—a result we do not countenance.

Insofar as there is any issue concerning the accuracy of Supreme Court’s calculation of the future damages award, that issue is not before us, nor was it litigated below. The stipulation entered into by the parties narrowed the scope of this appeal solely to the issue of “whether the trial court properly discounted the future wrongful death damages back to the date of death, and awarded interest thereon from the date of death to the date of judgment,” not whether the calculation itself was accurate. Hence, we do not address whether the preverdict interest should have been added to the award discounted to the date of death or to the award discounted to the date of verdict.

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

Smith, J. (dissenting).

In Milbrandt v Green Refractories Co. (79 NY2d 26, 36 [1992]) we held that, where future damages have been discounted to the date of a jury’s verdict, the amount so calculated already includes interest up to that date and no further calculation of pre-verdict interest is necessary or appropriate. Milbrandt was a well-reasoned decision that reached a fair result, and the application of Milbrandt would produce a fair result in this case.

The majority here, however, holds that the date-of-verdict damages must be discounted back to the date of decedent’s death, and that interest must then be added from the date of death to the date of verdict. This should be a useless but harmless exercise, for the two calculations should cancel each other; but here, for reasons no one has attempted to explain, the discounting was done using an interest rate of roughly 4%, while interest was calculated at the statutory rate of 9%—in effect doubling the interest and giving plaintiff a significant windfall. I see no justification for this procedure, and I therefore dissent.

I

Milbrandt, like this case, was an action for wrongful death. In Milbrandt, as in this case, part of the jury’s award was for “postverdict losses”—i.e., “what decedent would, in the future, have contributed to the care and support of his family” (79 NY2d at 32). In Milbrandt, “the court instructed the jury to discount the [post-verdict] damages by reducing the award to its cash value on the day of the verdict” (id.). Here, pursuant to CPLR article 50-B, the jury verdict included an undiscounted amount of post-verdict damages; the trial court, after modifying the verdict as the result of a pretrial motion and making certain other adjustments required by statute, calculated a date-of-verdict present value (see majority op at 366). I see no reason why this difference—the difference between a calculation by the jury and one by the judge—should be significant, and I find Milbrandt controlling here.

In Milbrandt, we rejected the idea that the date-of-verdict present value needed to be the subject of any further interest calculation. We said:

“When, as with the awards in the cases before us, an intended amount is not discounted to the date of death, but only to the date of the verdict, the award includes the return that would be earned on the principal from the date of death to the date of the verdict. . . .
“If, as in the cases before us, the damages are discounted only to the date of verdict, then that award already includes interest on the principal sum from the date of death to the date of verdict, and additional interest is a windfall.” (79 NY2d at 35-36 [emphasis added].)

We therefore held in Milbrandt that no pre-verdict damages should be added to future damages discounted by the jury to present value at date of verdict. For the same reason, in this case there is no reason to add anything to the $3,104,848 in date-of-verdict present value calculated by the court. That amount fully compensates plaintiff for his future losses as of the date of verdict.

II

Plaintiff nevertheless asked the trial court for, and was granted, what he called “Interest on Future Wrongful Death Damages.” He began his calculation of this amount by discounting the $3,104,848 from the date of verdict to the date of death. He did not disclose the interest rate he used in the discounting process, but it is clear from his result that it was approximately (or perhaps exactly) 4.36%. He arrived at a date-of-death value of $2,487,465, then calculated interest going forward to the date of verdict at 9%, producing an interest figure of $1,190,747. Then—for reasons I cannot fathom, and which plaintiff has not explained—he added this interest not to the date-of-death value, but to the date-of-verdict value of $3,104,848 (an amount which, by definition, already included interest at 4.36% from date of death to date of verdict), reaching a sum of $4,295,595 in future damages plus interest.

I put aside plaintiffs bizarre choice to add the interest to the date-of-verdict value, rather than to the date-of-death value on which it was calculated. This was obviously wrong—by adding interest to an amount that already included interest, plaintiff essentially claimed, and obtained, interest at more than 13% on his date-of-death value—but I acknowledge that, since defendant failed to complain of this error, we may be powerless to correct it. The more basic problem, of which defendant did complain, is that plaintiff’s whole calculation of “Interest on Future Wrongful Death Damages” makes no sense.

In principle, there is no harm in discounting back from date of verdict to date of death and adding interest from date of death to date of verdict—because if the discounting is done correctly, there is no difference between following that procedure and simply awarding the date-of-verdict present value, as Milbrandt did. The discount rate and the interest rate should be identical, and the amount subtracted and the amount added will thus cancel each other. As a federal Court of Appeals explained in Woodling v Garrett Corp. (813 F2d 543, 560 [2d Cir 1987]), a case we approved in Milbrandt (79 NY2d at 36, 37): “Assuming that the inflation-adjusted discount rate is based on the legal rate of interest, which is used in calculating prejudgment interest, this practice [discounting and adding interest] reaches precisely the same result as [awarding date-of-verdict value].”

The calculations, if done properly, reach the same result because the whole point of discounting is to find the amount of money on an earlier date that is equivalent in value to a given amount on a later date. To do so, one must choose a discount rate equal to the rate of interest the person holding the funds between the two dates is expected to earn (see generally Gilbert, Forensic Discount Rates, 1 J Legal Econ 40 [1991]). Here, choosing the discount rate is an easy task, because we know the interest rate plaintiff could expect to earn from the date of death to the date of verdict: 9%, by statute (CPLR 5004). And if we use that discount rate there is no need to do the exercise at all, because it consists in effect of subtracting and adding the same amount of money.

In Rohring v City of Niagara Falls (84 NY2d 60, 69 [1994]), we recognized the equivalence between the Milbrandt approach of awarding date-of-verdict value and the discounting and adding approach. We said in Rohring, “in [Milbrandt] we held that future damages should be discounted to the date of liability, which by statute is the date of death, before interest is calculated on them” (84 NY2d at 69). The majority quotes part of this language (majority op at 368), but omits Rohring’s reference to Milbrandt and thus obscures the key point: The discounting and adding approach is identical in substance to the Milbrandt approach—if the discounting and adding is done correctly.

It was not done correctly here. Plaintiff presented to Supreme Court, and obtained approval of, a calculation in which the discount rate was 4.36% and the interest rate from date of death was 9%. (I am ignoring the distinction between compound and simple interest, which does not affect the argument.) I do not find in plaintiffs submissions, or in the opinions below, or in today’s majority opinion, any reasoned argument that supports discounting with a lower interest rate, and then adding back interest at a higher one. That is not only inconsistent with Milbrandt: it is an irrational procedure that accomplishes nothing except putting defendant’s money in plaintiffs pocket.

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

Order affirmed, with costs.

      . We note that CPLR article 50-A was amended in 2003, such that wrongful death damages in medical malpractice cases are awarded as a lump sum and not subject to structuring.

      . The dissent concludes that there is no justification under Milbrandt to discount the award back to the date of death at a discount rate which is “equal to the rate of return to be expected from reasonably safe investments” (79 NY2d at 32) and then add interest at the statutory rate of 9% (see CPLR 5004; dissenting op at 370). However, the concern in Milbrandt was not the discrepancy between the discount rate and the statutory interest rate, but the windfall that would occur if one added interest to an undiscounted award. To interpret Milbrandt in the manner in which the dissent does makes the distinction between personal injury awards which are due at the time of verdict and wrongful death awards which are due at the time of death meaningless. Such a reading also renders the language in Rohring that “future damages should be discounted to the date of liability, which by statute is the date of death, before interest is calculated on them” (84 NY2d at 69) similarly meaningless. That the difference between the discount rate and the statutory interest rate provides a benefit to plaintiff is an issue for the legislature and not one for judicial determination (see Desiderio v Ochs, 100 NY2d 159, 176 [2003, Rosenblatt, J., concurring]).

       The parties and the majority assume, as do I, that the date of the damages verdict is an appropriate date for a present value calculation. In principle, for the reasons I explain below, it should not matter what date is chosen as long as there is no discrepancy between the rate used in discounting back to a date and in adding interest after that date.


author: Ciparick, J. Pigott, J. (dissenting).

text:
    [963 NE2d 1219, 940 NYS2d 518]
    John Gronski et al., Appellants, v County of Monroe, Respondent.
    Argued October 12, 2011;
    decided November 17, 2011

      POINTS OF COUNSEL

      The Wolford Law Firm LLP, Rochester (Elizabeth A. Wolford and Michael R. Wolford of counsel), for appellants.
    I. The out-of-possession landlord standard for premises liability should not be applied outside the landlord-tenant context. (Peralta v Henriquez, 100 NY2d 139; Basso v Miller, 40 NY2d 233; Melo v LaGuardia Fitness Ctr. Corp., 72 AD3d 761; Litwack v Plaza Realty Invs., Inc., 11 NY3d 820; Chapman v Silber, 97 NY2d 9; Campbell v Holding Co., 251 NY 446; Putnam v Stout, 38 NY2d 607; Juarez v Wavecrest Mgt. Team, 88 NY2d 628; Guzman v Haven Plaza Hous. Dev. Fund Co., 69 NY2d 559; Rousseau v Gugliuzza, 285 AD2d 993.) II. The Fourth Department’s decision conflicts with decisions from the First, Second and Third Departments that have refused to apply the out-of-possession landlord standard outside the leasehold context. (Page v State of New York, 72 AD3d 1456; Fernandez v Town of Babylon, 72 AD3d 636; Scott v Redi, 43 AD3d 1031; Perez v Metropolitan Museum of Art, 304 AD2d 481; Ferro v Burton, 45 AD3d 1454; Thompson v Port Auth. of N.Y. & N.J., 305 AD2d 581; Regensdorfer v Central Buffalo Project Corp., 247 AD2d 931.) III. Even if the out-of-possession landlord standard applied, it is apparent that defendant should be held to a duty of care since one of the exceptions applies. (Kolmel-Hayes v South Shore Cruise Lines,

      Inc., 23 AD3d 530; Gerber v West Hempstead Convenience, 2 AD3d 260; Gilmartin v Tempestose, 273 AD2d 875; Hughes v Cold Spring Constr. Co., 26 AD3d 858; Strunk v Zoltanski, 62 NY2d 572.) IV Defendant had a nondelegable duty to provide plaintiff with a safe place to work. (Scott v Redi, 43 AD3d 1031; Kleeman v Rheingold, 81 NY2d 270; Backiel v Citibank, 299 AD2d 504; Rosenberg v Equitable Life Assur. Socy. of U.S., 79 NY2d 663; Bart v Universal Pictures, 277 AD2d 4; Reid v Styco of Rochester, 214 AD2d 955.)

      Gibson, McAskill & Crosby, LLP, Buffalo (Victor Alan Oliveri of counsel), for respondent.
    I. The County of Monroe relinquished operational control over the Monroe County Recycling Center and therefore should not be subject to liability in tort for injuries allegedly sustained by plaintiff while working at the recycling center as an employee of Metro Waste Paper Recovery U.S., Inc., the independent contractor retained by the County to operate the recycling center. (Ritto v Goldberg, 27 NY2d 887; Butler v Rafferty, 100 NY2d 265; Kleeman v Rheingold, 81 NY2d 270; Brothers v New York State Elec. & Gas Corp., 11 NY3d 251; City of New York v Pennsylvania R.R. Co., 37 NY2d 298; Fresina v Nebush, 209 AD2d 1004; Ferro v Burton, 45 AD3d 1454; Regensdorfer v Central Buffalo Project Corp., 247 AD2d 931; Thompson v Port Auth. of N.Y. & N.J., 305 AD2d 581; Stark v Port Auth. of N.Y. & N.J., 224 AD2d 681.) II. The County of Monroe did not owe a nondelegable duty to provide for plaintiffs safety. (Rosenberg v Equitable Life Assur. Socy. of U.S., 79 NY2d 663; Whitaker v Norman, 75 NY2d 779; McDonald v Shell Oil Co., 20 NY2d 160; Besner v Central Trust Co. of NY., 230 NY 357; Kleeman v Rheingold, 81 NY2d 270; Brothers v New York State Elec. & Gas Corp., 11 NY3d 251; Khan v Bangla Motor & Body Shop, Inc., 27 AD3d 526; Bart v Universal Pictures, 277 AD2d 4; Nagy v State of New York, 89 AD2d 199.)
   OPINION OF THE COURT

Ciparick, J.

At issue in this appeal is whether the courts below erred in finding, as a matter of law, that defendant County of Monroe (the County) relinquished control over a county-owned but independently operated recycling center such that the County is not liable to plaintiff John Gronski for injuries sustained as a result of an unsafe condition on the premises. We hold that an issue of fact exists as to whether and to what extent the County exercised control over the subject property.

I.

Plaintiff was employed as a mechanic by Metro Waste Paper Recovery U.S., Inc. (Metro Waste) at a recycling center owned by the County. Metro Waste operated the facility as an independent contractor. On August 11, 2003, plaintiff was walking through the recycling center when a bale of paper weighing nearly one ton fell from a stack of other bales and landed on him. According to plaintiffs complaint, the stacked bales were not properly placed in the designated storage area, and no support mechanisms were used to secure them in place. As a result of the accident, plaintiff sustained serious injuries, including numerous bone fractures, a torn urethra, internal bleeding and a collapsed lung. An Occupational Safety and Health Administration (OSHA) investigation report stated that the unsecured stacked bales presented a serious regulatory violation. Metro Waste was cited accordingly.

The relationship between the County and Metro Waste is governed by an operations and maintenance agreement (the agreement), which the parties entered into in 2002. The agreement established that Metro Waste “shall have complete charge of and responsibility for the Facility and Facility Site, its subcontractors, materialmen, materials, equipment and personnel engaged in the performance of its work [and] . . . shall perform its work in accordance with its own methods . . . subject to the limited review authority of the County.” The agreement also assigned all responsibility for repair, maintenance and safety at the facility to Metro Waste. The County, however, retained “the right of access to the Facility in order to determine compliance by the Contractor with the terms and conditions of this Agreement, and . . . the right ... to take visitors and group tours through . . . the Facility.” The agreement also gave the County the right to, among other things, determine which persons were authorized to utilize the recycling center, access all books and records maintained and terminate the agreement for cause on 10 days notice. Finally, the agreement required Metro Waste to submit for the County’s approval an annual program manual describing its “Plant Operating Procedures, including maintenance, staffing, health and safety.”

Plaintiff commenced the instant action against the County alleging that the County was negligent for failing to exercise due care to prevent an unsafe condition, to wit, improperly stacked and stored bales at the recycling center. Plaintiff also claimed that the County was negligent in allowing a defective baler to be used at the recycling center, resulting in improperly wound bales that contributed to the accident. The County moved for summary judgment, arguing that, like an out-of-possession landlord, it had relinquished all control over the maintenance and operations of the recycling center to Metro Waste pursuant to the agreement and was not contractually obligated to repair unsafe conditions on the premises.

In opposition to the County’s motion, plaintiff submitted the deposition testimony of County Department of Environmental Services engineers Patrick Collins and Russell Rutkowski, and Metro Waste general manager Jeffrey Meyers. Collins testified that he conducted public tours at the facility approximately every week. Rutkowski was charged with overseeing Metro Waste’s compliance with the agreement. He testified that he visited the recycling center unannounced on a weekly basis, typically walking through the entire facility to ensure that work was being performed in accordance with the agreement’s terms. Both plaintiff and Meyers attested to seeing Rutkowski at the facility, with Meyers stating that the visits typically lasted about an hour. When asked about his oversight authority on maintenance and safety issues at the facility, Rutkowski vacillated, stating both that he did and did not possess the authority to monitor and report safety hazards. Rutkowski went on to state that if he observed an unsafe condition, such as a worker without a hard hat, he would bring it to Meyers’ attention. Rutkowski also indicated that Collins would report his observations of litter or other housekeeping and maintenance issues to Rutkowski, who in turn relayed them to Meyers, though Meyers stated he did not discuss maintenance or safety with Rutkowski or Collins. Rutkowski further testified that he had previously seen bales stacked nine feet high outside of the designated storage area, but did not know they presented an OSHA violation.

Supreme Court granted the County’s motion for summary judgment. It held that

“[l]ooking at the entire [agreement], the rights retained by the County do not create a duty to maintain a safe environment for an employee of Metro Waste . . . Under the [agreement] Metro Waste was responsible for all safety issues . . . There is no question of fact of control created by the terms of the [agreement].” (Emphasis omitted.)

Supreme Court further held that “the County, as an out-of-possession landlord who relinquishes control of the premises and is not contractually obligated to repair unsafe conditions, is not liable to the [p]laintiff . . . for personal injuries caused by an unsafe condition existing on the premises” (internal quotation marks omitted). The Appellate Division affirmed, holding that “[Supreme Court] properly analogized this case to those cases involving out-of-possession landlords” (Gronski v County of Monroe, 73 AD3d 1439, 1439 [4th Dept 2010]). The Appellate Division concluded that the County “met its initial burden of establishing that it did not exercise control over the subject [facility and] . . . [p]laintiff failed to raise a triable issue of fact” (id. [internal quotation marks omitted]). We granted plaintiff leave to appeal (15 NY3d 708 [2010]) and now reverse.

II.

To begin, we reject the out-of-possession landlord standard as applied by the courts below as no leasehold was created by the agreement (see Butler v Rafferty, 100 NY2d 265, 271 n 3 [2003]). Generally, a landowner owes a duty of care to maintain his or her property in a reasonably safe condition (see Peralta v Henriquez, 100 NY2d 139, 144 [2003]; see also Basso v Miller, 40 NY2d 233, 241 [1976]). That duty is premised on the landowner’s exercise of control over the property, as “the person in possession and control of property is best able to identify and prevent any harm to others” (Butler, 100 NY2d at 270). Indeed, “[i]t has been held uniformly that control is the test which measures generally the responsibility in tort of the owner of real property” (Ritto v Goldberg, 27 NY2d 887, 889 [1970]). Thus, a landowner who has transferred possession and control is generally not liable for injuries caused by dangerous conditions on the property (see Chapman v Silber, 97 NY2d 9, 19 [2001]). Control is both a question of law and of fact (see Ritto, 27 NY2d at 889).

In Ritto, we applied this standard and concluded that, despite a lease that transferred possession and control to commercial tenants, the issue of whether the landlord actually exercised control over the premises was one for the jury (see id. at 888-889). There, the defendant landlord leased a room to operators of an automatic washing machine business, granting the tenants “exclusive use of the aforementioned room” (id. at 888). The plaintiff, a residential tenant injured by a defective washing machine, sued both the landlord and the commercial tenants (see id. at 887-888). While we found that, pursuant to the lease, the “landlord surrendered the right of occupancy . . . and reserved no control over the instruments used by those tenants in their business” (id. at 888), we concluded that:

“[t]here is proof . . . from which a jury might determine that the landlord, by a long course of conduct of his employees in reporting malfunctions of the machines to the repair service and the owner, so intervened in the operation of the business as to give rise to a reliance by residential tenants in the building on reports of malfunction being made by the landlord. Hence a liability might result if reports were not made and this played an effective part in the occurrence of the accident” (id. at 889).

More recently, in Butler, we applied the control principle to find that the defendant, a tenant in common who entered into a non-lease agreement with his sister/cotenant, was not liable to a plaintiff injured on their jointly-owned property (see 100 NY2d at 268-271). The agreement divided the cotenants’ living quarters and obligated both parties to share in expenses for maintenance and repairs (see id. at 267). The plaintiff, a guest who was injured after falling from a bunk bed on the sister’s portion of the property (see id. at 267-268), contended “that [the brother’s] control of the premises was established primarily through [the repair] clause in the contract” (id. at 271). We concluded that, because the defendant exercised no supervisory role over his sister’s sphere, was not permitted access to it, and in fact could not access it due to a blocked entryway, he did not “in any way exercise [ ] possession or control over her portion of the property” (id.) and, therefore, could not be held in breach of a duty to the plaintiff (see id. at 270-271).

Thus, it follows that when a landowner and one in actual possession have committed their rights and obligations with regard to the property to a writing, we look not only to the terms of the agreement but to the parties’ course of conduct—including, but not limited to, the landowner’s ability to access the premises—to determine whether the landowner in fact surrendered control over the property such that the landowner’s duty is extinguished as a matter of law (see id,.).

In this case, the agreement between the County and Metro Waste unambiguously assigned the responsibility to implement safe practices and to remedy unsafe conditions at the recycling center to Metro Waste. Significantly, however, the agreement vested the County with ultimate approval authority over Metro Waste’s operating procedures. Morever, an examination of the County’s conduct indicates that it maintained both a visible and vocal presence at the recycling center. Unlike the defendant in Butler, who was entirely excluded from his cotenant’s portion of the property (see id.), here, the agreement granted the County supervisory rights and unfettered access to the facility. In fact, the County availed itself of those provisions through Collins’ regular public tours and Rutkowski’s routine, unannounced inspections. Though Rutkowski equivocated on the specific issue of his authority to monitor and remedy unsafe conditions— answering both yes and no to the question of whether he oversaw safety and maintenance issues—he offered specific examples of circumstances in which he would take action, such as upon observing workers without hard hats.

The dissent opines that unlike in Ritto, plaintiff did not demonstrate reliance on these aspects of Rutkowski’s involvement in the operation of the recycling center (see dissenting op at 384). In Ritto, the fact that residential tenants came to rely on reports of washing machines’ malfunctioning being made by the landlord’s employees raised a question as to the landlord’s exercise of control over the premises, despite the presumptive transfer of control accomplished by the leasehold between the landlord and the commercial tenants (see 27 NY2d at 889). Ritto, however, did not establish reliance on the landowner’s conduct as a distinct element of the control analysis to be required in all cases going forward, especially where, as here, no leasehold exists.

Viewing all of the evidence in the light most favorable to the plaintiff, as we must on this motion for summary judgment (see Branham, v Loews Orpheum Cinemas, Inc., 8 NY3d 931, 932 [2007]), we cannot say, as did the lower courts, that, as a matter of law, the County relinquished complete control of the recycling center to Metro Waste. In focusing exclusively on the terms of the agreement to designate the County free from any duty owed to plaintiff, the courts below erred in failing to give due weight to the County’s course of conduct. The dissent places similar emphasis on the agreement, though it ignores the supervisory rights the agreement reserves to the County and the fact that the County enjoyed wide access to the facility. The dissent disparages that we should find, based on plaintiffs evidence, an issue of fact “over whether the County assumed control over the safety operations” (dissenting op at 384 [emphasis added]). Yet that position rests on a mistaken premise that absolute control was transferred to Metro Waste to begin with, despite the absence of a leasehold between Metro Waste and the County. Rather, the County, as landowner, remains in presumptive control over its property and subject to the attendant obligations of ownership until it is found that control was relinquished, either as a matter of law or by a factfinder after presentation of all of the evidence. As we do not agree with our dissenting colleagues that relinquishment of control is proved here as a matter of law, the issue that remains to be resolved by a trier of fact is whether the County, through its course of conduct, exercised sufficient control over the facility such that it owed plaintiff a duty to prevent and remedy the kind of condition that resulted in his injury.

Accordingly, the order of the Appellate Division should be reversed, with costs, and defendant’s motion for summary judgment denied.

Pigott, J. (dissenting).

It is undisputed that “control is the test which measures generally the responsibility in tort of the owner of real property” (Ritto v Goldberg, 27 NY2d 887, 889 [1970]). As we explained in Ritto, a landowner who relinquishes control of a premises may nonetheless be held liable for injuries that occur thereon if the landowner or its employees engage in a “course of conduct” from which a jury could infer that the landowner intervened in the operation of the premises to the point that it induced reliance by those utilizing it (id.). In my view, plaintiff simply failed to produce any evidence to establish that the County of Monroe, through its employees’ conduct, so intervened in how the recycling center was run that it induced reliance on the part of Metro Waste and its employees to the point where the County should be held liable for the alleged improper stacking of the bales by Metro Waste employees.

The comprehensive operations and maintenance agreement between the County and Metro Waste evidenced that the County relinquished control over the operations of the recycling center to Metro Waste. The agreement identifies Metro Waste as “an independent contractor” that “shall have complete charge of and responsibility for the [recycling facility and its site], its subcontractors, materialmen, materials, equipment and personnel engaged in the performance of its work.” Not only that, the agreement requires Metro Waste to “perform its work in accordance with its own methods and have complete responsibility to direct and control its performance under the Agreement, subject to the limited review authority of the County as set forth in the Agreement” (emphasis supplied).

Metro Waste’s obligations with regard to safety of its employees are just as comprehensive as its obligations to run the recycling center, if not more so: Metro Waste was obligated to “maintain the safety of the [recycling center] at a level consistent with Applicable Law and normal industrial and solid waste management practices” and, most importantly here, “at its cost and expense,” it agreed to

“take all reasonable precautions for the safety of, and provide all reasonable protection to prevent damage, injury or loss by reason of or related to the operation of the [recycling center] to . . . all employees working at the [recycling center] and all other persons who may be involved with the operation or maintenance of the [recycling center].”

The aforementioned provisions are significant because the County and Metro Waste agreed that Metro Waste was in “complete charge” of the recycling center, had “complete responsibility to direct and control its performance,” and that it was Metro Waste’s duty to “provide all reasonable protection” to its employees. Moreover, according to the agreement, the recyclable materials were to be “properly stored prior to removal and transfer” and it was Metro Waste’s responsibility to “expeditiously remedy any nuisance conditions.” Therefore, given the comprehensive terms of this agreement, the only way the County could be found to have owed a duty to plaintiff is if it so intervened in the affairs of the recycling center that it induced reliance on the part of Metro Waste and/or plaintiff.

Plaintiff seeks to hold the County liable for allowing an “unsafe, insecure, unstable and dangerous condition” to be present at the recycling center, namely, the improperly placed and stacked bale that struck plaintiff. But there is no evidence in this record that the County’s employees affirmatively directed Metro Waste or its employees as to how the bales should have been stacked. The majority makes much of the fact that “Rutkowski . . . testified that he had previously seen bales stacked nine feet high outside of the designated storage area, but did not know they presented an OSHA violation” (majority op at 378), but this underscores the point that the County, pursuant to the agreement, was not charged with controlling how Metro Waste operated the recycling center. It also demonstrates that the County did not intervene in directing how the bales were stacked and, therefore, it could not be said that the County induced reliance on the part of Metro Waste or plaintiff through its conduct. Indeed, plaintiff testified that he was unaware of any instance where the County told Metro Waste employees where or how to stack the bales, and Metro Waste’s general manager at the recycling center testified that it was Metro Waste’s responsibility alone to determine how and where bales were stacked.

The mere fact that Rutkowski himself allegedly believed that he had oversight authority over maintenance and safety issues, as the majority states (majority op at 378), is irrelevant. Given the comprehensive nature of the agreement, it is Rutkowski’s conduct that is relevant, not what Rutkowski believed. Plaintiff produced no evidence that would permit a jury to infer that the County controlled Metro Waste’s operations as to how the bales were to be stacked and stored. In fact, the evidence indicates otherwise. Unlike the situation in Ritto—where the landowner’s employees routinely reported malfunctions in the business tenant’s washing machines to both the repair service and the business tenant, intervening in the operation of the business to the point where a jury could infer that the residential tenants may have been induced to rely on the landlord’s reports of washing machine malfunctions—there is no evidence that any of the County’s conduct could have induced reliance on the part of plaintiff that the County was in charge of how the bales were to be stacked.

How the majority can conclude that there is a question of fact over whether the County assumed control over the safety operations based on the testimony that Rutkowski complained about litter and cleanliness on occasion or would advise Metro Waste management if he observed an employee not wearing a hard hat is beyond me. None of that evidence raises a question of fact vis-a-vis the County’s control over the recycling center’s operations or, more specifically, how the bales were stacked. Therefore, I would affirm the order of the Appellate Division.

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

Order reversed, etc.

      . The relevant regulation, 29 CFR 1910.176 (b), provides: “Storage of material shall not create a hazard. Bags, containers, bundles, etc., stored in tiers shall be stacked, blocked, interlocked and limited in height so that they are stable and secure against sliding or collapse.”

      . Plaintiffs wife, Nancy Gronski, sues derivatively.

      . In deciding the issue here we need not reach plaintiffs product liability claim.

       The majority does not dispute that the County met its initial burden establishing its entitlement to summary judgment.