author: Ciparick, J.

text:
    [826 NE2d 802, 793 NYS2d 831]
    In the Matter of Diamond Waterproofing Systems, Inc., Appellant, v 55 Liberty Owners Corp., Respondent.
    Argued February 8, 2005;
    decided March 24, 2005

      POINTS OF COUNSEL

      Ira L. Hyams, PC., Somers (Ira L. Hyams of counsel), for appellant.
    I. The Federal Arbitration Act does not govern the dispute involved in this proceeding. (Allied-Bruce Terminix Cos., Inc. v Dobson, 513 US 265; Citizens Bank v Alafabco, Inc., 539 US 52.) II. Even if the Federal Arbitration Act applies, the statute of limitations issue is to be determined by the Court. (Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193, cert denied sub nom. Manhard v Merrill Lynch, Pierce, Fenner & Smith, Inc., 516 US 811; Matter of Smith Barney Shearson v Sacharow, 91 NY2d 39; John Hancock Life Ins. Co. v Wilson, 254 F3d 48; Bensadoun v Jobe-Riat, 316 F3d 171.) III. 55 Liberty Owners Corp.’s arbitration was commenced after the expiration of the statute of limitations. (Video Corp. of Am. v Flatto Assoc., 58 NY2d 1026; Phillips Constr. Co. v City of New York, 61 NY2d 949; State of New York v Lundin, 60 NY2d 987; Cabrini Med. Ctr. v Desina, 64 NY2d 1059; Inner City Drywall Corp. v Reliance Ins. Co. of N.Y., 263 AD2d 438.) IV The demand for arbitration served on Diamond Waterproofing Systems, Inc. on February 10, 2003 does not relate back to the demand for arbitration served on Diamond Waterproofing Co., Inc. on September 20, 2002. (Mondello v New York Blood Ctr.—Greater N.Y. Blood Program, 80 NY2d 219; Valmon v 4 M & M Corp., 291 AD2d 343, 98 NY2d 611; Mercer v 203 E. 72nd St. Corp., 300 AD2d 105; Achtziger v Fuji Copian Corp., 299 AD2d 946; Goldman v City of New York, 287 AD2d 689; Wilson v City of Buffalo, 298 AD2d 994; Connell v Hayden, 83 AD2d 30; Matter of Morris v New York State Dept, of Taxation & Fin., 82 NY2d 135; First Capital Asset Mgt. v N.A. Partners, 300 AD2d 112; Aetna Elec. Distrib. Co. v Homestead Elec., 279 AD2d 541.) V If the Court directs the arbitration to proceed, the Court should limit the arbitration to those items that were not finished at the time of substantial completion. (Bensadoun v Jobe-Riat, 316 F3d 171; Merrill Lynch, Pierce, Fenner & Smith v Barchman, 916 F Supp 845.) VI. The Appellate Division committed prejudicial error when it issued prejudicial dicta making it impossible for Diamond Waterproofing Systems, Inc. to obtain a fair hearing from the arbitrator on the statute of limitations issue. (Chance v Guaranty Trust Co. of N.Y., 164 Misc 346, 251 App Div 855.)

      Anderson & Ochs, LLP, New York City (Steven S. Anderson and Jason A. Stern of counsel), for respondent.
    I. The Appellate Division properly held that the Federal Arbitration Act is applicable, and that, as such, all timeliness issues are reserved for arbitration. (Allied-Bruce Terminix Cos., Inc. v Dobson, 513 US 265; Howsam v Dean Witter Reynolds, Inc., 537 US 79; Matter of Rederi [Dow Chem. Co.], 25 NY2d 576, 398 US 939; Matter of Smith Barney Shearson v Sacharow, 91 NY2d 39; Hamershlag, Kempner & Co. v Oestrich, 234 AD2d 172; Citizens Bank v Alafabco, Inc., 539 US 52; Perry v Thomas, 482 US 483; Southland Corp. v Keating, 465 US 1; Matter of Ayco Co. [Walton], 3 AD3d 635; Sears Roebuck & Co. v Glenwal Co., 325 F Supp 86, 442 F2d 1350.) II. The Appellate Division properly found that— even if the statute of limitations issue was one for the courts— the proceeding below should not have been dismissed as untimely commenced. (Buran v Coupal, 87 NY2d 173; Schiavone v Victory Mem. Hosp., 300 AD2d 294; Austin v Interfaith Med. Ctr., 264 AD2d 702; Schiavone v Fortune, 477 US 21; Brock v Bua, 83 AD2d 61; Mercer v 203 E. 72nd St. Corp., 300 AD2d 105; Valmon v 4 M & M Corp., 291 AD2d 343; Achtziger v Fuji Copian Corp., 299 AD2d 946; Mondello v New York Blood Ctr.— Greater N.Y. Blood Program, 80 NY2d 219; Goldman v City of New York, 287 AD2d 689.)
   OPINION OF THE COURT

Ciparick, J.

On this appeal, the issues presented are whether the Federal Arbitration Act (9 USC § 1 et seq. [FAA]) governs the parties’ contract dispute and, if so, whether the question as to the timeliness of the subject arbitration demand is an issue for the arbitrator or the courts. We conclude that the FAA is applicable here as the contract had an effect on interstate commerce. We further conclude that the timeliness question and all other related questions are for the arbitrator to determine because the contract’s choice of law provision does not provide that New York law shall govern the enforcement of the parties’ agreement.

I.

Petitioner Diamond Waterproofing Systems, Inc. (Diamond Systems) is a corporation primarily engaged in the business of waterproofing, masonry and related trades. Respondent 55 Liberty Owners Corp. is a cooperative that owns a nationally land-marked residential building located in Manhattan. On May 5, 1995, these parties entered into a contract pursuant to which Diamond Systems would repair and reconstruct the entire facade and roof of Liberty’s building. Under the contract, they agreed to submit “[a]ny controversy or Claim arising out of or related to the Contract” for arbitration. The contract further provided that “[it] shall be governed by the law of the place where the Project is located.”

By October 1996, Diamond Systems had finished its work on the project. However, following the World Trade Center attacks of September 11, 2001, an engineering inspection of the building revealed cracks on the facade that were not present when the project was completed. Consequently, on September 20, 2002, Liberty served a demand for arbitration on nonparty Diamond Waterproofing Company, Inc. (Diamond Company) for breach of contract and negligence. The statement of claim sought damages “in an amount currently unknown but equal to . . . the cost of restoring and repairing the facade and underlying supports of the Building.” In response, Diamond Company sought to permanently stay arbitration pursuant to CPLR 7503, contending that it was not a party to the subject contract and that the demand failed to advise that it had 20 days to make an objection. Supreme Court granted the stay, and subsequently denied Liberty’s motion for leave to reargue and renew Diamond Company’s application.

On February 10, 2003, Liberty commenced a new arbitration proceeding naming Diamond Systems as the proper respondent. Diamond Systems then petitioned for a permanent stay on the ground that the demand for arbitration was barred pursuant to the six-year statute of limitations set forth in CPLR 213 (2). Diamond Systems contended that because its work on the project was substantially completed on September 18, 1996 and fully completed by October 10, 1996, the February 2003 demand for arbitration was untimely. Liberty cross-moved to dismiss the petition, arguing that the FAA governed this action and that the issue of timeliness was for the arbitrator to determine. Liberty further argued that its demand against Diamond Systems was timely under the relation-back doctrine.

Supreme Court granted Diamond Systems’ petition and denied the cross motion. The court reasoned that Liberty’s reliance on the FAA was misplaced as the parties did not agree to arbitrate and no substantial nexus existed between the project and interstate commerce for purposes of applying the FAA. The Appellate Division reversed, denied Diamond Systems’ petition for a permanent stay of arbitration, granted Liberty’s cross motion and dismissed the petition. The Court held that the FAA is applicable to this dispute “since the subject project ‘affected’ interstate commerce” (6 AD3d 101,104 [2004]), and that Supreme Court erred in employing the substantial nexus test to hold otherwise. The Court concluded therefore that under the FAA the timeliness issue was one for the arbitrator, not the courts. We granted Diamond Systems’ motion for leave to appeal, and now affirm.

II.

Diamond Systems and Liberty first dispute whether a sufficient nexus with interstate commerce exists to establish FAA coverage of their contract. The courts below were split as to what test should be employed, Supreme Court applying the more stringent substantial effect on interstate commerce standard and the Appellate Division applying the more generous “affects” test. In determining which standard controls, we turn to the language of the Act and United States Supreme Court cases interpreting the statute.

The FAA provides that a written arbitration provision in “a contract evidencing a transaction involving commerce . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract” (9 USC § 2 [emphasis added]). The Supreme Court has interpreted the words “involving commerce” as the functional equivalent of the phrase “affecting commerce,” which ordinarily signals Congress’ intent to exercise its Commerce Clause powers to the fullest extent (see Allied-Bruce Terminix Cos., Inc. v Dobson, 513 US 265, 273-274 [1995]). Thus, where a contract containing an arbitration provision “affects” interstate commerce, disputes arising thereunder are subject to the FAA. To be sure that the FAA is applicable to those transactions that have an effect on interstate commerce, the Supreme Court has recently reaffirmed the validity of Allied-Bruce (see Citizens Bank v Alafabco, Inc., 539 US 52, 53 [2003]; see also Wien & Malkin, LLP v Helmsley-Spear, Inc., 300 AD2d 32, 33 [1st Dept 2002], lv denied 99 NY2d 511 [2003], revd and remanded 540 US 801, 801 [2003]).

We conclude that the project here affected interstate commerce, triggering application of the FAA. Numerous out-of-state entities were involved in the transaction. The project manual and the engineer’s drawings were created in a joint effort with a structural engineering firm headquartered in Illinois. Diamond Systems’ largest supplier of materials for the project, MJM Studios, Inc., was a New Jersey company, and project meetings and visits were often scheduled at MJM’s offices. The largest supplier of equipment for the project, Dunlop Equipment, Inc., was a Massachusetts company. Further, various additional materials, equipment and services for the project were obtained from Oklahoma, Maryland and Kansas.

We turn next to the question whether the timeliness of the arbitration demand should be resolved by the arbitrators or the courts. The “presumption is that the arbitrator should decide ‘allegation's] of waiver, delay, or a like defense to arbitrability’ ” (see Howsam v Dean Witter Reynolds, Inc., 537 US 79, 84 [2002], quoting Moses H. Cone Mem. Hosp. v Mercury Constr. Corp., 460 US 1, 25 [1983]). Questions concerning “ ‘whether prerequisites such as time limits, notice, laches, estoppel, and other conditions precedent to an obligation to arbitrate have been met, are [generally] for the arbitrators to decide’ ” (id. at 85 [citation omitted]).

However, in recognition of the FAA policy that private arbitration agreements be enforced according to their terms (see Dean Witter Reynolds, Inc. v Byrd, 470 US 213, 219 [1985]), an exception to this rule exists where parties explicitly agree to leave timeliness issues to the court (see Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193, 201 [1995], cert denied sub nom. Manhard v Merrill Lynch, Pierce, Fenner & Smith, Inc., 516 US 811 [1995]; see also Howsam, 537 US at 85). Contracting “parties are at liberty to include a choice of law provision in their agreement” expressing an intention to have the courts determine statute of limitations issues (see Luckie, 85 NY2d at 201; see also Matter of Smith Barney Shearson v Sacharow, 91 NY2d 39, 47-49 [1997]).

It is well settled that where “parties broadly agree[ ] to arbitrate ‘any controversy’ ” arising from their contracts, they may—as with any contract—add qualifications to that clause by providing that New York law will govern the agreement and its enforcement {Luckie, 85 NY2d at 202). A choice of law provision, which states that New York law shall govern both “the agreement and its enforcement,” adopts as “binding New York’s rule that threshold Statute of Limitations questions are for the courts” {id.). In the absence of more critical language concerning enforcement, however, all controversies, including issues of timeliness, are subjects for arbitration {see id.).

Here, Diamond Systems and Liberty agreed to submit “[a]ny controversy or Claim arising out of or related to the Contract” for arbitration. Their choice of law provision provides only that “[t]he Contract shall be governed by the law of the place where the Project is located.” The parties did not express an intent to have New York law govern their agreement’s enforcement. Therefore, the timeliness issue should be determined by the arbitrator.

In light of our conclusion, the remaining issues—whether the demand for arbitration served on Diamond Systems should relate back to the timely demand on Diamond Company for purposes of timeliness (see e.g. Buran v Coupal, 87 NY2d 173 [1995]) and, if so, whether the initial demand is invalid for failure to comply with the requirements of CPLR 7503 (c)—are also reserved for the arbitrator. They are intertwined and dis-positive of the statute of limitations issue and thus beyond our reach.

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

Chief Judge Kaye and Judges G.B. Smith, Rosenblatt, Graffeo, Read and R.S. Smith concur.

Order affirmed, with costs.

       Diamond Company and Diamond Systems are separate corporations. However, both corporations engage in the same trade, share a business address, telephone and fax numbers and are supervised by the same president and chief executive officer, Joseph Soehngen.


source: Caselaw Access Project

author: Rosenblatt, J.

license: Public Domain

text:
    [827 NE2d 276, 794 NYS2d 293]
    City of New York, Respondent, v Verizon New York, Inc., et al., Appellants.
    Argued February 16, 2005;
    decided March 24, 2005

      POINTS OF COUNSEL

      Blank Rome LLP, New York City (Harris N. Cogan, Michael S. Simon, Joseph N Cordaro and Stephen J. Meyer of counsel), for appellants.
    Section 24-521 of the Administrative Code of the City of New York, by its plain language, applies exclusively to underground facilities and not to overhead facilities. (Patrolmen’s Benevolent Assn, of City of N.Y. v City of New York, 41 NY2d 205; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; Rosner v Metropolitan Prop. & Liab. Ins. Co., 96 NY2d 475; Matter of Hernandez v Barrios-Paoli, 93 NY2d 781; Matter of Brown v Wing, 93 NY2d 517; Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98; A.J. Temple Marble & Tile v Union Carbide Marble Care, 87 NY2d 574; Matter of Excellus Health Plan, Inc. v Serio, 2 NY3d 166; Riley v County of Broome, 95 NY2d 455; Matter of Branford House v Michetti, 81 NY2d 681.)

      Michael A. Cardozo, Corporation Counsel, New York City (Suzanne K. Colt and Pamela Seider Dolgow of counsel), for respondent.
    Administrative Code of the City of New York § 24-521 (b) does not contain an exemption from the duty to remove utility interferences in city streets in cases where the installations are above ground, and such an exemption should not be read into the statute. Verizon New York, Inc.’s interpretation of the relevant Administrative Code sections as applying only to its underground facilities is contrary both to the Administrative Code’s plain language and to its manifest purpose. Thus, the Supreme Court properly denied Verizon’s motion to dismiss. (New Orleans Gas-Light Co. v Louisiana Light & Heat Producing & Mfg. Co., 115 US 650; New York Elec. Lines Co. v Empire City Subway Co., 235 US 179; Transit Commn. v Long Is. R.R. Co., 253 NY 345; New York City Tunnel Auth. v Consolidated Edison Co. of N.Y., 295 NY 467; Matter of Consolidated Edison Co. of N.Y. v Lindsay, 24 NY2d 309; Matter of Diamond Asphalt Corp. v Sander, 92 NY2d 244; City of New York v Consolidated Edison Co. of N.Y., 114 AD2d 217; Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98; Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205; Matter of Excellus Health Plan, Inc. v Serio, 2 NY3d 166.)

      Patterson, Belknap, Webb & Tyler LLP, New York City (Saul

      B. Shapiro, Naomi J. Schrag, Kathleen H. Scopp and Abby F. Strauss of counsel), for Time Warner Cable of New York City, amicus curiae.
   OPINION OF THE COURT

Rosenblatt, J.

Operating as a penal provision, New York City Administrative Code § 24-521 requires utility companies to relocate certain facilities when necessary to accommodate public works projects. If a utility does not promptly comply with a removal order from the City, the Code subjects the utility to a fine and its executives to possible imprisonment (see Administrative Code §§ 19-149, 19-150).

Section 24-521 (a) states that “[w]henever any sewer, culvert, water main or pipe is to be constructed, altered or repaired in any street in which the pipes, mains or conduits of public service corporations are laid, the contractor therefor shall give notice thereof in writing to such corporations, at least forty-eight hours before breaking ground therefor.” The statute goes on to provide that when utilities receive notice, they must “remove or otherwise protect and replace their pipes, mains and conduits, and all fixtures and appliances connected therewith or attached thereto” (Administrative Code § 24-521 [b]). We are called upon to interpret section 24-521 and determine whether it extends to aboveground poles and wires.

Verizon New York, Inc., a public utility, maintains overhead telephone poles and wires in the City of New York. The City hired a contractor to build sewers in Queens. In December 2000, the contractor notified Verizon that certain facilities (aboveground telephone poles and wires) had to be relocated to make way for the construction scheduled to begin the following month. The contractor and Verizon could not agree on a plan for removing the facilities. On February 5, 2001, the City’s Department of Design and Construction issued an “order out” directing Verizon to remove or reconfigure its facilities so the sewer project could begin. Verizon complied 103 days late, after it had negotiated a price for the work. The City assessed a penalty of $515,000 against Verizon—$5,000 for each day it was late in complying with the order out—as provided by Administrative Code § 19-150, and then brought this enforcement proceeding in Supreme Court.

Verizon moved to dismiss, arguing that Administrative Code § 24-521 does not apply to aboveground facilities. Disagreeing, the court denied the motion. With one Justice dissenting, the Appellate Division affirmed and certified to us the question whether its order was properly made. We conclude that it was not.

Utility companies have a longstanding common-law obligation to move their facilities when they interfere with municipal work projects. In Transit Commn. v Long Is. R.R. Co. (253 NY 345, 351 [1930]), this Court explained that a utility’s privilege to maintain its facilities came at the cost of “mak[ing] such changes as the public convenience and security require, at its own cost and charge.” There is, then, absolutely no question that a utility must relocate its facilities and pay for the task.

The question before us is simply whether the City may assess a fine against Verizon based on the text of the Administrative Code. Here, the City did not pursue actual damages that it would be entitled to at common law, but rather relied on a Code provision making a penalty available without regard to actual damages. The language of section 24-521—“pipes, mains and conduits, and all fixtures and appliances connected therewith or attached thereto”—is ambiguous and does not explicitly refer to facilities above or below ground. In the municipal utility setting before us, “pipes” and “mains,” however, are generally thought of as underground facilities. Perhaps most tellingly, section 24-521 also refers to facilities as being laid “in any street.” Statutory language should be read in context. We, therefore, construe the word “conduits,” like the other terms in the section, to refer only to underground facilities.

Because section 24-521, in conjunction with section 19-150, is a penal provision, we must construe it narrowly and are not inclined to stretch the Code’s text to include telephone poles and aboveground wires. This Court has long held that “[a] statute awarding a penalty is to be strictly construed, and before a recovery can be had a case must be brought clearly within its terms.” Indeed, when there is reasonable doubt surrounding the interpretation of a statute, “the party, of whom the penalty is claimed, is to have the benefit of it” (Goodspeed v Ithaca St. Ry. Co., 184 NY 351, 354 [1906]; see also McKinney’s Cons Laws of NY, Book 1, Statutes § 271).

Section 24-521 operates as a penal statute because it imposes civil fines without regard to the City’s actual costs. The City does not argue the penalties are remedial. Indeed, violating the Code provision can lead to jail time (see Administrative Code §§ 19-149, 19-150). The City Council may, of course, clarify the Code text as it sees fit. It is not for us, however, to move beyond the four corners of this penal provision to bring Verizon’s conduct within its purview.

The order of the Appellate Division should be reversed, with costs, defendants’ motion to dismiss granted and the certified question answered in the negative.

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Graffeo and Read concur; Judge R.S. Smith taking no part.

Order reversed, with costs, defendants’ motion to dismiss the complaint granted and certified question answered in the negative.

      . See e.g. Matter of Leering, 93 NY 361, 362 (1883); Chicago, Burlington, & Quincy Ry. Co. v People of State of Ill., 200 US 561, 587 (1906).

        . See also New York City Tunnel Auth. v Consolidated Edison Co. of N.Y., 295 NY 467, 474-475 (1946); Matter of Diamond Asphalt Corp. v Sander, 92 NY2d 244, 249 (1998), rearg denied 92 NY2d 921 (1998).

      . As Supreme Court observed, a utility may hire the City’s contractor to perform the necessary interference work, hire its own contractor, or do the work itself, but it may not leave interfering facilities in place and delay projects until it finds the best price for the work (see also City of New York v Consolidated Edison Co., 114 AD2d 217, 220 [1st Dept 1986]).

      . Osborne v International Ry. Co., 226 NY 421, 426 (1919); see also People v Bene, 288 NY 318, 323 (1942) (mandating a narrow and strict construction of penal provisions).


author: Graffeo, J.

text:
    [827 NE2d 269, 794 NYS2d 286]
    In the Matter of the Estate of Blanche D. Hunter, Deceased. Chase Manhattan Bank, as Trustee of the Trust Under Paragraph eighth (b) of the Will of Blanche D. Hunter, Deceased, for the Benefit of Pamela Townley Creighton, Respondent; Judith Chinello et al., as Administrators C.T.A. of the Estate of Pamela Townley Creighton, Deceased, et al., Appellants.
    Argued February 10, 2005;
    decided March 24, 2005

      POINTS OF COUNSEL

      Williams & Williams, Rochester (Mitchell T. Williams of counsel), for appellants.
    I. The objections under review are directed against the paragraph eighth cb> trustee, not against the executor or the paragraph eighth (a> trustee. (Matter of Smather, 309 NY 487; Meinhard v Salmon, 249 NY 458; Matter of Parkinson, 134 Misc 2d 565; Matter of Menzie, 54 Misc 188; Matter of Massimino, 143 Misc 119; Continental Ins. Co. v Col

      angione, 94 AD2d 916; Julien J. Studley, Inc. v Lefrak, 66 AD2d 208, 48 NY2d 954; Weiner v Greyhound Bus Lines, 55 AD2d 189; Lipkind v Ward, 256 App Div 74; Palmer v Hussey, 87 NY 303, 119 US 96.) II. The bank and the majority opinion of the Appellate Division render SCPA 2210 (7) meaningless. (Matter of Parkinson, 134 Misc 2d 565; Matter of Ziegler, 161 Misc 2d 203; Fisher v Banta, 66 NY 468.) III. The majority opinion contains certain holdings which find no support in any statute or case law. (Matter of Ziegler, 161 Misc 2d 203; O’Brien v City of Syracuse, 54 NY2d 353; Matter of Reilly v Reid, 45 NY2d 24; Meinhard v Salmon, 249 NY 458; Matter of Leland, 219 NY 387; Matter of Shaw, 186 AD2d 809; Matter of Marsh, 179 AD2d 578.) IV In the prior accounting proceedings Pamela Creighton did not have the opportunity to be heard on her present objections. (Matter of Alker, 20 AD2d 894; Matter of Long Is. Loan & Trust Co. [Garretson], 92 App Div 1, 179 NY 520; Matter of Donner, 82 NY2d 574; Bank of N.Y. v New Jersey Tit. Guar. & Trust Co., 256 App Div 609, 257 App Div 806; Matter of Brunner, 49 Misc 2d 139, 26 AD2d 838; Matter of Connors, 36 Misc 2d 866.) V. SCPA 2210 (10) does not protect the bank (as the paragraph eighth [b] trustee), for its failure to act with respect to either the 1977 or the 1981 accountings. (Fisher v Banta, 66 NY 468; Matter of Ziegler, 157 Misc 2d 423.) VI. Neither the 1977 executorial nor the 1981 paragraph eighth (A) decree bars the paragraph eighth (B) objections pursuant to the doctrine of res judicata. (Molino v County of Putnam, 29 NY2d 44; Matter of Juan C. v Cortines, 89 NY2d 659.) VII. The fact that the bank was acting in a dual capacity did not relieve it of its fiduciary duties as the paragraph eighth (b) trustee. (Meinhard v Salmon, 249 NY 458; Matter of Kistler, 167 Misc 528; Macy v Williams, 55 Hun 489, 125 NY 767; Bank of N.Y. v New Jersey Tit. Guar. & Trust Co., 256 App Div 609, 257 App Div 806; Villard v Villard, 219 NY 482; Matter of Chalmers, 163 Misc 142; Matter of Brunner, 49 Misc 2d 139, 26 AD2d 838.) VIII. Any attempt to graft an exculpatory provision on SCPA 2210 (10) where none exists should be rejected by this Court. (New Amsterdam Cas. Co. v Stecker, 3 NY2d 1; Matter of Patrolmen’s Benevolent Assn. of City of Buffalo v City of Buffalo, 50 AD2d 101; Matter of Parkinson, 134 Misc 2d 565; Matter of Massimino, 143 Misc 119.) IX. The Appellate Division dissent’s adoption of the Pepper rule (Pepper v Zions First Natl. Bank, N.A., 801 P2d 144 [Utah 1990]) should be adopted by the Court of Appeals. (Bank of N.Y. v New Jersey Tit. Guar. & Trust Co., 256 App Div 609; Matter of Menzie, 54 Misc 188; Matter of Chaves, 143 Misc 868;
      Rosner v Paley, 116 Misc 2d 454, 99 AD2d 1018, 65 NY2d 736; Matter of Rothko, 43 NY2d 305; Matter of Connors, 36 Misc 2d 866.) X. The bank has never adequately disclosed the violations of its fiduciary duties to the trust beneficiary. (Matter of Seaman, 275 App Div 484, 300 NY 756; Matter of Ziegler, 161 Misc 2d 203, 213 AD2d 280, 86 NY2d 712; Matter of Rudin, 292 AD2d 283; Matter of Zilkha, 174 AD2d 331.) XI. The Court of Appeals should reverse the order below.

      Harris Beach LLP, Pittsford (Paul J. Yesawich, III, and Gregory J. McDonald of counsel), and Ruskin Moscou Faltischek, PC., Uniondale (C. Raymond Radigan of counsel), for respondent.
    I. The Second Department’s holding is in accord with more than 125 years of New York decisional and statutory law. (Fisher v Hubbell, 65 Barb 74, affd sub nom. Fisher v Banta, 66 NY 468; Mullane v Central Hanover Trust Co., 339 US 306; Pray v Hegeman, 98 NY 351; Globe & Rutgers Fire Ins. Co. v Hines, 273 F 774, 257 US 643; Matter of Haigh, 125 Misc 365; Matter of Busto, 173 Misc 25, 258 App Div 980; Krimsky v Lombardi, 78 Misc 2d 685, 51 AD2d 600; Matter of Zaharis, 148 AD2d 868; Matter of Weir, 182 Misc 845.) II. Objectant’s argument regarding SCPA 2210 (7) is meritless. (Matter of Ziegler, 157 Misc 2d 423.) III. Objectant’s reliance on SCPA 1506 is misplaced and, in fact, confirms the Second Department’s interpretation and application of SCPA 2210 (10). (Fisher v Hubbell, 65 Barb 74, affd sub nom. Fisher v Banta, 66 NY 468; Matter of Menzie, 54 Misc 188; Matter of Chaves, 143 Misc 868, 239 App Div 900; Matter of Massimino, 143 Mise 119.) IV The result under SCPA 2210 (10) is consistent with the doctrines of res judicata and collateral estoppel as the Second Department clearly stated. (O’Brien v City of Syracuse, 54 NY2d 353; Matter of Ziegler, 161 Misc 2d 203; Buechel v Bain, 97 NY2d 295, 535 US 1096; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65; Gramatan House Invs. Corp. v Lopez, 46 NY2d 481; Matter of Chaves, 143 Misc 868; Matter of Massimino, 143 Misc 119.) V. Objectant’s remaining arguments are equally meritless and should be rejected by the Court. (Matter of Connors, 36 Misc 2d 866; Matter of Brunner, 49 Misc 2d 139, 26 AD2d 838; Matter of Donner, 82 NY2d 574; Matter of Chaves, 143 Misc 868, 239 App Div 900; Matter of Menzie, 54 Misc 188; Matter of Ziegler, 161 Misc 2d 203; Matter of Chapin, 171 Misc 783; Matter of Van Deusen, 24 Misc 2d 611; Matter of Long Is. Loan & Trust Co. [Garretson], 92 App Div 1, 179 NY 520; Matter of Alker, 20 AD2d 894.)

      Eliot Spitzer, Attorney General, New York City (Robert R. Molic
      and Gerald A. Rosenberg of counsel), in his statutory capacity under EPTL 8-14.

      Sidley Austin Brown & Wood LLP, New York City (Eileen Caulfield Schwab, Roger J. Hawke, Darcy M. Katris and Kimberly A. Johns of counsel), and Roberta Kotkin for New York Bankers Association, amicus curiae.
    I. The Appellate Division correctly held that appellant’s objections are barred. II. The decision of the Appellate Division accords with precedent. III. SCPA 2210 (7) imposes no duty upon a successor fiduciary to object to the conduct of a predecessor fiduciary. (Matter of Killan, 172 NY 547; Matter of Altman, 115 Misc 476.) IV A successor fiduciary does not have a duty to object to its own conduct as predecessor. (Bank of N.Y. v New Jersey Tit. Guar. & Trust Co., 256 App Div 609; Villard v Villard, 219 NY 482; Matter of Brunner, 49 Misc 2d 139, 26 AD2d 838; Matter of Chalmers, 163 Misc 142; Matter of Kistler, 167 Misc 528; Meinhard v Salmon, 249 NY 458; City Bank Farmers Trust Co. v Cannon, 291 NY 125; Matter of Van Deusen, 37 AD2d 131.) V. Pepper v Zions First Natl. Bank, N.A. (801 P2d 144 [Utah 1990]) does not apply. (Matter of Chaves,143 Misc 868, 239 App Div 900; Matter of Menzie, 54 Misc 188; Matter of Alker, 20 AD2d 894; Matter of Schmidt, 163 Misc 610; Matter of Ziegler, 161 Misc 2d 203; Matter of Chapin, 171 Misc 783.) VI. The purpose of SCPA 2210 (10) is to avoid placing a successor fiduciary in a position of divided loyalty. (Matter of Parkinson, 134 Misc 2d 565; Fisher v Banta, 66 NY 468; Matter of Ziegler, 157 Misc 2d 423; Matter of Massimino, 143 Misc 119; Matter of Hernandez v Barrios-Paoli, 93 NY2d 781; Matter of Stevens v Wing, 293 AD2d 49.)
   OPINION OF THE COURT

Graffeo, J.

In this case we are required to decide whether the doctrine of res judicata applies to judicial proceedings settling an estate and a trust accounting, submitted by a bank that acted both as executor and as trustee. Under the facts and circumstances presented here, we conclude that the beneficiary of a separate testamentary trust managed by the same bank is precluded from raising objections to the fiduciary’s actions that could have been raised in prior proceedings.

I. Background

This case arises following more than 20 years of fiduciary involvement with the assets of the estate of Rochester resident Blanche Hunter, who died in 1972 leaving a gross estate in excess of $28 million. A substantial portion of Hunter’s estate consisted of common stock of the Eastman Kodak Company. Paragraph eighth (A) of Hunter’s will established a residuary trust for the benefit of her granddaughter Alice E Creighton, and paragraph eighth (b> created a residuary trust for the benefit of another granddaughter, the objectant Pamela Townley Creighton. Both granddaughters were minors at the time of Hunter’s death. Each trust was to be funded with one half of the residuary estate, and in the event either granddaughter died without issue or without having exercised the power of appointment, the balance of that trust would pour over into the other trust. Hunter’s will designated Lincoln Rochester Trust Company, petitioner Chase Manhattan Bank’s predecessor, as coexecutor of the estate with James W. Cook, a trust officer. Hunter also selected the Bank and Cook to serve as the cotrustees of Trusts A and B.

The will was admitted to probate in January 1973. In March, the Bank and Cook partially funded each of the granddaughters’ trusts with a cash distribution of over $40,000 from the estate. Between 1973 and the conclusion of the estate’s administration in 1977, the Bank and Cook periodically transferred Kodak stock to the trusts, so that each trust eventually held about 13,000 shares. From late 1972 to 1977 the price of Kodak stock apparently dropped from $148 to $70 per share, resulting in a decline in aggregate value of the trusts’ stock of over $2 million.

As coexecutors of Hunter’s estate, the Bank and Cook commenced a proceeding seeking judicial settlement of the estate account in 1976. Having been served with notification of the accounting, Pamela Creighton, the beneficiary of Trust B, appeared through counsel and filed objections to the amount of attorneys’ fees sought by the Bank but raised no other concerns about the management of estate assets. Surrogate’s Court settled the account in a 1977 decree, which provided that “the said Executors be and hereby are released from all further liability and responsibility as such Executors as to all matters embraced in their Account and this Decree.”

Alice Creighton, the beneficiary of Trust A, died in 1980 without issue and never having exercised her power of appointment. Under the terms of Hunter’s will, Alice’s assets, including 13,000 shares of Kodak stock, were transferred to Pamela’s trust—Trust B. In July 1981, the Bank and Cook sought to judicially settle their account as cotrustees of Trust A. The co-trustees again served the petition on Pamela. Rather than appearing in the proceeding, Pamela executed a waiver and did not file any objections to the account. In 1981, Surrogate’s Court issued a decree settling the account and discharging the cotrustees “from all further liability and responsibility as such Trustees as to all matters embraced in their Account and this Decree.”

After Cook died in 1996, the Bank initiated a judicial accounting of Trust B, covering the years 1973-1996. A Bank representative met with Pamela in California to deliver a copy of the account and to obtain a waiver of citation if she found the account satisfactory. Before reviewing the account documents, Pamela signed the waiver. Upon obtaining the waiver, Surrogate’s Court settled the account in 1998. Pamela later consulted an attorney and commenced a proceeding to withdraw her waiver and vacate the 1998 decree, seeking to file objections to the account. After conducting a fact-finding hearing, Surrogate’s Court determined that “the waiver was not knowingly and intelligently given,” set aside the waiver and vacated the decree (190 Mise 2d 593, 600 [2002]). The Bank did not appeal this decision.

Pamela then filed objections to the account of Trust B, including the claims now under review. As relevant here, her objections fell into three categories, but all pertain to the Bank’s conduct in its capacity as trustee of Trust B. First, she claimed that the Bank acted improperly by failing to diversify the high concentration of Trust B assets in Kodak stock. Second, Pamela contended that the Bank breached its duty to challenge its actions as executor in failing to diversify the stockholdings in Hunter’s estate and in not timely funding the trusts. Third, Pamela asserted that the Bank breached its duty to object to its actions as trustee of Trust A in failing to diversify the stock-holdings of Trust A.

The Bank moved to dismiss the second and third categories of objections (i.e., allegations against the Bank, as trustee of Trust B, for its failure to object to the estate and Trust A accountings). The Bank argued that Pamela’s failure to object in the 1977 and 1981 judicial accounting proceedings precluded these claims under the doctrine of res judicata.

Surrogate’s Court denied the Bank’s motion to dismiss the second and third categories of objections. The court rejected the Bank’s argument that those objections were barred by res judicata, concluding that the Bank’s “actions as cotrustee of the eighth (B) Trust were not subject to judicial scrutiny in either of those two proceedings” (194 Mise 2d 364, 370 [2002]).

Pamela Creighton died in 2002 and the administrators of her estate as well as the beneficiaries of her trust were substituted as the objectants. Thereafter, the Appellate Division, with one Justice dissenting, modified the Surrogate’s order, by granting the Bank’s motion to dismiss the second and third categories of objections (6 AD3d 117 [2d Dept 2004]). The majority held that Pamela’s opportunity to raise objections to the Bank’s alleged mismanagement as executor and trustee of Trust A in the 1977 and 1981 proceedings precluded her present objections to the Bank’s failure as trustee of Trust B to contest the prior accountings under the doctrine of res judicata. The Appellate Division granted leave to appeal to this Court, certifying the following question: “Was the opinion and order of this court dated March 29, 2004, properly made?” We answer in the affirmative.

II. Surrogate’s Court Procedure Act

Under article 22 of the Surrogate’s Court Procedure Act, fiduciaries such as executors and trustees have an obligation to account for their actions. Executors ordinarily account at the conclusion of estate administration while trustees account “when the trust is terminated or when they cease to serve” (Turano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 58A, SCPA 2205, at 18). Although the SCPA does not require a fiduciary to give periodic or intermediate accountings, where trusts are managed over a lengthy period trustees often account periodically.

A fiduciary may voluntarily proceed to obtain formal judicial settlement of an account under SCPA 2208. Additionally, certain persons, including beneficiaries under a will or trust, may initiate a proceeding to compel a formal accounting (see SCPA 2205). The court may also compel a judicial accounting on its own initiative (see SCPA 2205).

Judicial settlement serves the interests of both the fiduciary and the beneficiary in that it provides full disclosure of the fiduciary’s financial transactions and, upon issuance of a decree, the fiduciary is released from liability for those transactions (see 6 Warren’s Heaton, Surrogates’ Courts § 91.02 [1], at 91-4 [6th ed rev]). Where a fiduciary commences a judicial accounting and accounts to a trustee, it is generally not necessary to serve process on the beneficiaries of that trust because the trustee represents the beneficiaries’ interests (see SCPA 2210 [7]). But SCPA 2210 (10) provides an exception to this rule for a fiduciary who simultaneously fulfills more than one role:

“[w]here an accounting fiduciary accounts to himself in a separate capacity as the fiduciary of a deceased beneficiary of the estate, or as trustee . . . process shall issue to all persons interested in the estate of the deceased beneficiary, ... or the trust of which the accounting party is trustee.”

Thus, under the statute, if the fiduciary seeking to account also serves as a trustee, the fiduciary must notify trust beneficiaries directly of any accounting proceeding.* **

Long before the enactment of SCPA 2210 (10), this Court addressed the significance of notification to beneficiaries in accounting proceedings involving multicapacity fiduciaries. In Fisher v Banta (66 NY 468 [1876]), this Court held that, where a fiduciary seeks to account to itself in another capacity, an accounting decree will be conclusive only where persons ordinarily represented by the fiduciary in its alternate capacity “have been made parties to the accounting” (id. at 482). The Fisher multicapacity fiduciary rule was codified in SCPA 2210 (10), recognizing that an accounting fiduciary may not account to itself in a separate capacity absent the intervention of the beneficiaries. Thus, SCPA 2210 (10) performs a dual purpose: it requires multicapacity fiduciaries to give beneficiaries notice of the opportunity to raise objections to an accounting and, as a result of account settlement, fiduciaries obtain finality with respect to their actions.

III. Analysis

Objectants argue that the notice and opportunity to be heard provided in the 1977 and 1981 proceedings do not preclude the current objections because they concern only the Bank’s conduct as trustee of Trust B and not its conduct as executor of Hunter’s estate or as trustee of Trust A. The Bank counters that object-ants’ claims are actually directed at its failure to diversify stock-holdings and are in effect no different than the claims Pamela could have raised in the prior proceedings.

Under the doctrine of res judicata, a party may not litigate a claim where a judgment on the merits exists from a prior action between the same parties involving the same subject matter. The rule applies not only to claims actually litigated but also to claims that could have been raised in the prior litigation. The rationale underlying this principle is that a party who has been given a full and fair opportunity to litigate a claim should not be allowed to do so again (see O’Connell v Corcoran, 1 NY3d 179, 184-185 [2003]; Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481, 485 [1979]). Additionally, under New York’s transactional analysis approach to res judicata, “once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy” (O’Brien v City of Syracuse, 54 NY2d 353, 357 [1981], citing Matter of Reilly v Reid, 45 NY2d 24, 29-30 [1978]). “Res judicata is designed to provide finality in the resolution of disputes,” recognizing that “[considerations of judicial economy as well as fairness to the parties mandate, at some point, an end to litigation” (Reilly, 45 NY2d at 28).

These principles apply with equal force to judicially settled accounting decrees. As a general rule, an accounting decree is conclusive and binding with respect to all issues raised and as against all persons over whom Surrogate’s Court obtained jurisdiction (see Pray v Hegeman, 98 NY 351, 358 [1885]; Matter of Ziegler, 161 Misc 2d 203, 205 [Sur Ct, NY County 1994], affd 213 AD2d 280 [1995], Iv denied 86 NY2d 712 [1995]). Indeed this principle is so well settled that the drafters of the SCPA determined that it was unnecessary to include former section 274 of the Surrogate’s Court Act which had codified this rule, noting that it was “ ‘self-evident. . . that every decree whether upon an accounting or otherwise is binding upon all persons of whom jurisdiction was obtained’ ” (Ziegler, 161 Misc 2d at 205, quoting Revisers’ Notes, McKinney’s Cons Laws of NY, Book 58A, SCPA 2226 [now 2227], at 292 [1967 ed]; see also Turano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 58A, SCPA 2227, at 269). In accord with res judicata, an accounting decree is therefore conclusive as to issues that were decided as well as those that could have been raised in the accounting (see Matter of Roche, 259 NY 458, 461 [1932]; Pray, 98 NY at 358).

Applying the foregoing principles to this case, we agree with the Appellate Division that objectants are precluded from litigating the claims involving the Bank’s failure, in its capacity as trustee of Trust B, to object to its own voluntary accountings as executor of Hunter’s estate or as trustee of Trust A. The Bank complied with its obligation under SCPA 2210 (10) to notify Pamela of the 1977 proceeding to judicially settle the estate account. Represented by counsel in that proceeding, Pamela appeared but objected only to the attorneys’ fees, never challenging the fiduciaries’ management of estate assets. Similarly, in the 1981 accounting to settle Alice’s trust (Trust A), the Bank served Pamela with process but she chose to execute a waiver of citation and did not file any objections.

The claims objectants now seek to assert were discernible from the documents filed in these prior proceedings. The 1977 account disclosed the dates when the trusts were funded with Kodak stock and the decline in the value of the stock was apparent in the 1977 and 1981 accountings—indeed, objectants rely on those documents to support their present objections. Pamela therefore had a full and fair opportunity to raise objections relating to the Bank’s obligations as executor to diversify the stock or timely fund the trusts, or as trustee of Trust A to diversify the trust assets—the crux of the present objections.

We are not persuaded by the distinction objectants attempt to draw between objections relating directly to the Bank’s activities as executor and trustee of Trust A and the objections regarding the Bank’s duties, as trustee of Trust B, to object to its own prior accountings on Pamela’s behalf. There can be no doubt that under either formulation, the wrongful conduct objectants seek to redress pertains to the Bank’s alleged mismanagement of the estate and Trust A. Moreover, adoption of this argument would negate a fundamental objective of SCPA 2210 (10)—to ensure finality for multicapacity fiduciaries who comply with notice requirements. Nothing in the SCPA provides beneficiaries with a “second bite of the apple” where they have been afforded the opportunity to litigate the essence of their objections in a prior judicial settlement proceeding. Put simply, “[i]f a fiduciary gives full disclosure in his accounting, to which the beneficiaries are parties . . . they should have to object at that time or be barred from doing so after the settlement of the account” (Turano, 2003 Supp Practice Commentary, McKinney’s Cons Laws of NY, Book 58A, SCPA 1506, 2005 Pocket Part, at 66).

Finally, we note that Pamela’s opportunities to raise objections regarding the estate and Trust A accounts do not bar objectants from continuing to litigate their claims with respect to the Bank’s management of Trust B (objections numbered 1, 2 and 3 in this proceeding).

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

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Read and R.S. Smith concur.

Order affirmed, etc.

      . Judith Chinello and Stan Mandell, the administrators of Pamela’s estate, as well as Margaret Hunter and Pomona College, the appointees of the trust corpus, are now the objectants. For purposes of this opinion, the term objectants refers to the substituted parties.

      . Despite the fact that the SCPA does not require the preparation of periodic or intermediate accountings by trustees, one commentator has indicated that such accountings are customary every 10 years (see Turano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 58A SCPA 2205, at 18).

      . A fiduciary may also account informally by obtaining receipts and releases from interested parties regarding the handling of the estate or trust (see 6 Warren’s Heaton, Surrogates’ Courts § 91.04 [3], at 91-17 [6th ed rev]; Turano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 58A, SCPA 2202, at 7). The SCPA permits a fiduciary to file and record the receipt and release agreements with Surrogate’s Court (see SCPA 2202) and authorizes Surrogate’s Court to issue a decree based on these filed agreements (see SCPA 2203).

      . Notice to beneficiaries is not required by SCPA “where the accounting fiduciary has in said separate capacity one or more co-fiduciaries who are not his co-fiduciaries in his accounting capacity” (SCPA 2210 [10]). This provision is not applicable here.

      . The Attorney General, appearing in this case as a necessary party under article 8 of the Estates, Powers and Trusts Law due to the charitable interests implicated by Pomona College’s remainder beneficiary status in Trust B, generally agrees with objectants’ position. The Attorney General contends that “an accounting multicapacity fiduciary should, where applicable, disclose to the beneficiaries to whom it is accounting to that it has a conflict because of its dual capacity and should explain the potential issues that might arise because of that conflict.” While we concur that such a disclosure would be helpful, the SCPA contains no such requirement. The Attorney General also states that the Bank’s 1977 and 1981 accounts are not models of clarity. Although these accounts could have set forth more clearly the information relating to the transfer and value of assets for the benefit of lay beneficiaries, we note that the accounts do contain the relevant information relating to the Kodak stock transactions.

      . Under certain circumstances—for example, where a fiduciary procures a release waiving citation or a decree settling an account through fraud—a beneficiary may move to set aside the prior decree (see Matter of Frutiger, 29 NY2d 143, 149-150 [1971]; Matter of Zahoudanis, 289 AD2d 412 [2d Dept 2001]).


text:
    [826 NE2d 806, 793 NYS2d 835]
    South Road Associates, LLC, Appellant, v International Business Machines Corporation, Respondent.
    Argued February 16, 2005;
    decided March 29, 2005

      POINTS OF COUNSEL

      LeBoeuf, Lamb, Greene & MacRae, L.L.R, Albany (Michael W. Peters, Robert J. Alessi and Cindy M. Monaco of counsel), for appellant.
    I. The lease is unambiguous in that the “premises” consist of the entire site. (Sutton v East Riv. Sav. Bank, 55 NY2d 550; Fetner v Fetner, 293 AD2d 645; Tantleff v Truscelli, 110 AD2d 240, 69 NY2d 769; Matter of Bombay Realty Corp. v Magna Carta, 100 NY2d 124; R/S Assoc, v New York Job Dev. Auth., 98 NY2d 29; Matter of Westmoreland Coal Co. v Entech, Inc., 100 NY2d 352; Atwater & Co. v Panama R.R. Co., 246 NY 519; W.W.W Assoc, v Giancontieri, 77 NY2d 157; Schmidt v Magnetic Head Corp., 97 AD2d 151; Village of Hamburg v American Ref-Fuel Co. of Niagara, 284 AD2d 85.) II. Extrinsic evidence demonstrates that the parties intended to lease the entire site and that the “premises” consist of the entire site. (W.W.W Assoc, v Giancontieri, 77 NY2d 157; Newin Corp. v Hartford Acc. & Indem. Co., 62 NY2d 916; Christiana Point Devs, v Galesi, 143 AD2d 717; Loomis v New York Cent. & Hudson Riv. R.R. Co., 214 NY 447; Surlak v Surlak, 95 AD2d 371; Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285; Matter of Moncure v New York State Dept, of Envtl. Conservation, 218 AD2d 262; Studley v National Fuel Gas Supply Corp., 107 AD2d 122; Federal Ins. Co. v Americas Ins. Co., 258 AD2d 39.) III. International Business Machines Corporation’s indisputable failure to return the site to South Road Associates, LLC (SRA) contamination-free establishes SRA’s entitlement to judgment as a matter of law. (W.W.W Assoc, v Giancontieri, 77 NY2d 157; Chemical Bank v Stahl, 272 AD2d 1; Star Nissan v Frishwasser, 253 AD2d 491; Gettner v Getty Oil Co., 266 AD2d 342; Akron Meats v 1418 Kitchens, 160 AD2d 242; P.B.N. Assoc, v Xerox Corp., 141 AD2d 807; Civic Realty Co. v New York Tel. Co., 16 Misc 2d 660; McCormick v Moran, 182 Misc 2d 568; Fetner v Fetner, 293 AD2d 645; Kass v Kass, 91 NY2d 554.) IV International Business Machines Corporation is judicially estopped from denying that the “premises” it leased consist of the entire site. (Maas v Cornell Univ., 94 NY2d 87; Matter of Martin v C.A. Prods. Co., 8 NY2d 226; Douglas v Government Empls. Ins. Co., 237 AD2d 246; Perkins v Perkins, 226 AD2d 610; Prudential Home Mtge. Co. v Neildan Constr. Corp., 209 AD2d 394; Environmental Concern v Larchwood Constr. Corp., 101 AD2d 591; Tozzi v Long Is. R.R. Co., 170 Misc 2d 606, 247 AD2d 466.)

      Jones Day, New York City (Mark R. Seiden and Meir Feder of counsel), for respondent.
    I. The unambiguous terms of the lease require only that International Business Machines Corporation return its rented interior building space in “good order and condition.” (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470; Fox Paper v Schwarzman, 168 AD2d 604; W.W.W. Assoc, v Giancontieri, 77 NY2d 157; Rodolitz v Neptune Paper Prods., 22 NY2d 383; New York Overnight Partners v Gordon, 217 AD2d 20; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Reiss v Financial Performance Corp., 97 NY2d 195; Siegel v Kentucky Fried Chicken, 67 NY2d 792; Mionis v Bank Julius Baer & Co., 301 AD2d 104; A.J. Temple Marble & Tile v Union Carbide Marble Care, 87 NY2d 574.) II. Extrinsic evidence does not undercut the plain meaning of the defined term “premises” in the lease. (Ferrante v American Lung Assn., 90 NY2d 623; Manning v New York Tel. Co., 157 AD2d 264; Nassau Trust Co. v Montrose Concrete Prods. Corp., 56 NY2d 175; Kalimian v Olson, 130 Misc 2d 861; Muzak Corp. v Hotel Taft Corp., 1 NY2d 42; Loctite VSI v Chemfab N.Y., 268 AD2d 869.) III. Judicial estoppel does not apply to the present case. (Jones Lang Wootton USA v LeBoeuf, Lamb, Greene & MacRae, 243 AD2d 168; New Hampshire v Maine, 532 US 742; Inter-Power of N.Y. v Niagara Mohawk Power Corp., 208 AD2d 1073; Tilles Inv. Co. v Town of Oyster Bay, 207 AD2d 393; Malamut v Doris L. Sassower, P.C., 171 AD2d 780; Lory v Parsoff, 296 AD2d 535; European Am. Bank v Miller, 265 AD2d 374; Ferring v Merrill Lynch & Co., 244 AD2d 204; Tozzi v Long Is. R.R. Co., 170 Misc 2d 606, 247 AD2d 466.) IV Summary judgment would be improper even if this Court were to rule in favor of South Road Associates, LLC on the meaning of “premises” in the lease. (Black & Yates v A.R. Fuels, 26 Misc 2d 627; Wolf v 2539 Realty Assoc., 161 AD2d 11; Gettner v Getty Oil Co., 266 AD2d 342; Chemical Bank v Stahl, 272 AD2d 1; Star Nissan v Frishwasser, 253 AD2d 491; Akron Meats v 1418 Kitchens, 160 AD2d 242; McCormick v Moran, 182 Misc 2d 568; Civic Realty Co. v New York Tel. Co., 16 Misc 2d 660; Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470; Domen Holding Co. v Aranovich, 1 NY3d 117.)

      John E. Zuccotti, New York City, for Real Estate Board of New York, Inc., amicus curiae.
    I. Landlords and tenants must be able to rely upon the agreements memorialized in their written contracts. (Holy Props. Ltd. v Cole Prods., 87 NY2d 130; Maxton Bldrs. v Lo Galbo, 68 NY2d 373; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470.) II. Reading the parties’ lease in its entirety, “premises” is not limited to the interior space; the soil and groundwater are part of the leased property. (Backer Mgt. Corp. v Acme Quilting Co., 46 NY2d 211; Farrell Lines v City of New York, 30 NY2d 76; Matter of Westmoreland Coal Co. v En-tech, Inc., 100 NY2d 352; Matter of Bombay Realty Corp. v Magna Carta, 100 NY2d 124; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Atwater & Co. v Panama R.R. Co., 246 NY 519; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144.) III. As a matter of law and public policy, New York courts must enforce the express and implied terms and covenants of real estate contracts. (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Kalisch-Jarcho, Inc. v City of New York, 58 NY2d 377; Wood v Duff-Gordon, 222 NY 88.)
   OPINION OF THE COURT

Ciparick, J.

This appeal presents an issue of contract interpretation—the scope of the term “premises” as contained in the “good order and condition” provision of the parties’ lease agreement. Specifically, we address whether “premises” includes the land upon which the buildings are situated or only the buildings’ interior space. We conclude that “premises” as defined in the lease includes only the interior portions of the buildings.

Pursuant to a 1981 agreement between the parties, International Business Machines Corporation (IBM) leased certain space from South Road Associates (SRA) known as Buildings 952 and 982 located at 622 South Road in Poughkeepsie. IBM had occupied the same space since the 1950s under previous ownership and under earlier leases and had used the site for its commercial and manufacturing operations. During its occupancy of the site, IBM installed an underground storage tank to hold chemical waste. Through its own investigation, IBM discovered that the site’s groundwater and soil had become contaminated by hazardous chemicals resulting from a leak in the storage tank. IBM then undertook an independent effort to clean up the site that included removal of the underground storage tank and contaminated soil.

In 1984, the parties entered into an agreement wherein IBM accepted responsibility for the pollution, agreed to hold SRA harmless for any resulting claims and agreed to “abate” the pollution “to the satisfaction of all requisite governmental agencies” and restore the land to its previous condition. After continuing remedial efforts, IBM petitioned the New York State Department of Environmental Conservation (DEC) requesting that the site be reclassified from a class 2 (“Significant threat to the public health or environment—action required”) to a class 4 environmental hazard (“Site properly closed—requires continued management”) (ECL 27-1305 [2] [b] [2], [4]). DEC approved the reclassification. The parties entered into a subsequent agreement in February 1994, at the termination of the lease, giving IBM a right of access to the site in order “to maintain and operate” its “monitoring wells and a groundwater ‘Pump and Treat System.’ ” SRA does not claim a breach of these two agreements.

SRA commenced this action against IBM in January 2000, alleging several causes of action including a claim for breach of contract.* Specifically, SRA claims a breach of article 7 of the lease which requires that the “premises” be returned in “good order and condition.” SRA claims that by contaminating some of the property’s soil, bedrock and groundwater, IBM violated its agreement to return the premises in “good order and condition.”

IBM moved for summary judgment dismissing the complaint and SRA cross-moved for partial summary judgment on the issue of liability for breach of the lease provision. Supreme Court denied IBM’s motion and granted SRA’s cross motion. The court, allowing extrinsic evidence, found in SRA’s favor, stating that the lease, read as a whole, “conveys to IBM rights, obligations, use and occupancy of a leasehold that extends beyond space referenced in the document’s single precatory paragraph.”

A majority of the Appellate Division reversed, determining that the “clear and unambiguous” language of the lease demonstrated that the “premises” consisted of the buildings’ interior space (2 AD3d 829, 831 [2003]). One Justice dissented and voted to affirm, finding that IBM had occupied the entire property and was required pursuant to article 7 of the lease to return the entire property, rather than just the interior space, in good order and condition (2 AD3d at 833). We granted leave to appeal and now affirm.

In cases of contract interpretation, it is well settled that “ ‘when parties set down their agreement in a clear, complete document, their writing should ... be enforced according to its terms’ ” (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004], quoting W.W.W. Assoc, v Giancontieri, 77 NY2d 157, 162 [1990]). This principle is particularly important “ ‘in the context of real property transactions, where commercial certainty is a paramount concern, and where . . . the instrument was negotiated between sophisticated, counseled business people negotiating at arm’s length’ ” (Vermont Teddy Bear, 1 NY3d at 475, quoting Matter of Wallace v 600 Partners Co., 86 NY2d 543, 548 [1995]). It is also important to read the document as a whole to ensure that excessive emphasis is not placed upon particular words or phrases (see Matter of Westmoreland Coal Co. v Entech, Inc., 100 NY2d 352, 358 [2003]).

The language of the lease makes clear that the term “premises” was intended to include only the interior portions of the buildings. The lease states that the “premises” is the space shown on the “floor plan” consisting of a certain number of square feet “in two buildings.” Reading the lease as a whole also supports the interpretation that the term “premises” refers only to the interior space. The lease repeatedly mentions the “premises” separately from the water tower, appurtenances, land, parking lot and building. If “premises” was intended to include not only the interior space but also the buildings and the land surrounding the buildings, the language in these provisions would be superfluous. For example, one provision states that signs cannot be placed on the land or the outside of the building, but can be placed on the entrance doors to the premises. This provision clearly distinguishes the “premises”—as interior space—from the land and exterior portions of the building.

Whether a contract is ambiguous is a question of law and extrinsic evidence may not be considered unless the document itself is ambiguous (see Greenfield v Philles Records, 98 NY2d 562, 569 [2002]). Further, “extrinsic and parol evidence is not admissible to create an ambiguity in a written agreement which is complete and clear and unambiguous upon its face” (W.W.W. Assoc., 77 NY2d at 163 [internal quotation marks omitted]). Since the meaning of “premises” is clear and unambiguous in the lease, extrinsic evidence such as the conduct of the parties may not be considered. IBM’s conduct—placing underground storage tanks in the surrounding land and cleaning the resulting pollution—is not sufficient to create an ambiguity in the lease where the language is clear. Neither may the conduct of IBM in paying all real estate taxes pursuant to a lease provision create an ambiguity. The contract, read as a whole, clearly and consistently uses the term “premises” to refer only to interior space and we cannot rely on extrinsic evidence to find otherwise.

Since there is no allegation that IBM did not return the interior space “in good order and condition,” article 7 of the lease was not breached and summary judgment dismissing the complaint was properly granted to IBM.

The parties’ remaining contentions are without merit.

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

Chief Judge Kaye and Judges G.B. Smith, Graffeo, Read and R.S. Smith concur; Judge Rosenblatt taking no part. Order affirmed, with costs.

      . The provision defining the specific leasehold interest states:
      “That the Landlord hereby leases to the Tenant and the Tenant hereby hires and takes from the Landlord the space being more particularly shown on the attached floor plan designated Exhibit ‘A’ (hereinafter called the ‘premises’) consisting in the aggregate of 113,400 gross square feet in two buildings consisting of 113,400 gross square feet (hereinafter called the ‘buildings’) situated on real property (hereinafter called the ‘land’) located at 622 South Road (Route 9), and a Water Tower and appurtenances in the Town of Poughkeepsie, State of New York (her[e]inafter referred to as Buildings 952, 982).”

      . The breach of contract claim is the only cause of action remaining. The other causes of action—including claims for unconstitutional taking of private property, common-law negligence, breach of a statutory duty, public nuisance, absolute nuisance and unjust enrichment—were previously dismissed by Supreme Court and are not at issue here.

      . Article 7 states that, at the end of the lease:
      “the Tenant will remove its goods and effects . . . and will (a) peaceably yield up to the Landlord the premises in good order and condition, excepting ordinary wear and tear, repairs required to be made by the Landlord, or damage, destruction or loss by fire or other casualty or by any other cause . . . and (b) repair all damage to the premises and the fixtures, appurtenances and equipment of the Landlord therein, and to the building, caused by the Tenant’s removal of its furniture, fixtures, equipment, machinery and the like and the removal of any improvements or alterations.”

      . A copy of the “floor plan,” Exhibit “A,” was not made part of the record.


author: Per Curiam. Rosenblatt, J. (concurring).

text:
    [827 NE2d 259, 794 NYS2d 276]
    Leonard J. Levenson et al., Respondents, v Jonathan Lippman, as Chief Administrative Judge of the Courts, et al., Appellants.
    Argued January 4, 2005;
    decided February 15, 2005

      POINTS OF COUNSEL

      Michael Colodner, New York City, John J. Sullivan and David E. Markus for appellants.
    I. The Chief Administrative Judge, acting in his administrative capacity, had the constitutional authority to promulgate Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b). (Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191; Matter of Werfel v Agresta, 36 NY2d 624; Matter of Met Council v Crosson, 84 NY2d 328; Corkum v Bartlett, 46 NY2d 424; Durante v Evans, 94 AD2d 141, 62 NY2d 719; Matter of Kindlon v County of Rensselaer, 158 AD2d 178; Matter of Gilman v Golfinopoulous, 284 AD2d 224; People v Perry, 27 AD2d 154; Kraham v Mathews, 305 AD2d 746, 100 NY2d 512; Matter of McLaughlin v Mathews, 290 AD2d 846.) II. The Chief Administrative Judge created the administrative review process for excess compensation awards through a valid delegation from the Chief Judge. (Matter of Met Council v Crosson, 84 NY2d 328; Matter of Kindlon v County of Rensselaer, 158 AD2d 178.) III. Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) was not subject to the requirement of section 28 (c) of article VI of the New York Constitution that an administrative policy be approved by the Court of Appeals prior to being promulgated. (Corkum v Bartlett, 46 NY2d 424; Matter of Werfel v Agresta, 36 NY2d 624; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191; People v Perry, 27 AD2d 154; Bankers Trust Co. v Braten, 101 Misc 2d 227; Matter of Morgenthau v Cooke, 56 NY2d 24.) IV The administrative review procedures created by Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) are not governed by section 30 of article VI of the New York Constitution. (Matter of Werfel v Agresta, 36 NY2d 624; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191; Matter of Kindlon v County of Rensselaer, 158 AD2d 178.) V The Chief Administrator’s constitutional authority to review assigned counsel fee awards is not eroded by section 722-b of the County Law. (Matter of Werfel v Agresta, 36 NY2d 624; Matter of Met Council v Crosson, 84 NY2d 328; Durante v Evans, 94 AD2d 141; Tenney v Sise, 122 AD2d 370, 68 NY2d 910; Bartlett v Evans, 110 AD2d 612; Matter of Kindlon v County of Rensselaer, 158 AD2d 178; Byrnes v County of Monroe, 129 AD2d 229; People v Perry, 27 AD2d 154; Matter of Delmar Box Co. [Aetna Ins. Co.], 309 NY 60.)

      Wilmer Cutler Pickering Hale and Dorr LLP, New York City (Peter J. Macdonald, Dyan Finguerra-DuCharme and Kerry A. Malloy of counsel), for respondents.
    I. The Appellate Division should be affirmed because the Chief Administrative Judge’s power to “supervise the administration and operation of the unified court system” does not include the power to overrule or modify a trial court’s discretionary decision. (Byrnes v County of Monroe, 129 AD2d 229; Matter of Werfel v Agresta, 36 NY2d 624; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191; People v Hemmings, 2 NY3d 1; People v Barber, 74 NY2d 653; People v Dawson, 249 AD2d 977; McDonald v Northside Sav. Bank, 184 AD2d 426; Matter of Rattner v Planning Commn. of Vil. of Pleasantville, 156 AD2d 521; Balogh v H.R.B. Caterers, 88 AD2d 136; People v Witenski, 15 NY2d 392.) II. The Chief Administrative Judge did not promulgate Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) pursuant to a delegated authority under article VI, § 28 (b) of the New York Constitution. (Matter of Morgenthau v Cooke, 56 NY2d 24.) III. The procedure set forth in article VI, § 28 (c) of the New York Constitution must be followed because Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) is a statewide administrative policy. (Matter of Mor

      genthau v Cooke, 56 NY2d 24; Corkum v Bartlett, 46 NY2d 424; Matter of Werfel v Agresta, 36 NY2d 624; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191.) IV The Chief Administrative Judge does not have the power to enact a rule that conflicts with the Legislature’s intent to vest the trial court with final authority to award enhanced fees. (Matter of Kindlon v County of Rensselaer, 158 AD2d 178; People v Perry, 27 AD2d 154; Byrnes v County of Monroe, 129 AD2d 229; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 159 Misc 2d 109.)

      Michael A. Cardozo, Corporation Counsel, New York City (Leonard Koerner, Larry A. Sonnenshein and Julian L. Kalkstein of counsel), for City of New York, amicus curiae.
    The promulgation of Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) authorizing administrative judges to modify assigned counsel fee awards made by a trial judge was a valid exercise of the Chief Administrator’s powers that provides a necessary layer of review of what were once unilateral trial court determinations to spend public monies. (Matter of Werfel v Agresta, 36 NY2d 624; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 207 AD2d 307, 87 NY2d 191; Babigian v Wachtler, 181 AD2d 640; Matter of Gilman v Golfinopoulous, 284 AD2d 224; Matter of Kindlon v County of Rensselaer, 158 AD2d 178; Corkum v Bartlett, 46 NY2d 424; People v Brisman, 173 Misc 2d 573; People v Perry, 27 AD2d 154; Matter of Burk, 6 AD2d 429; People v Walker, 135 Misc 2d 370.)

      Edwin David Robertson, New York City, and Malvina Nathanson for New York County Lawyers’ Association, amicus curiae.
    I. Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 does not fall within the powers given directly to the Chief Administrator by the New York Constitution. (People v Perry, 27 AD2d 154.) II. The decision that extraordinary circumstances in a particular case justify paying an attorney at higher than the statutorily fixed rate is not an administrative task. (Matter of Werfel v Agresta, 36 NY2d 624; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191; People v Diehl, 286 App Div 1150; People v Heiselbetz, 30 App Div 199; Matter of Abrams [John Anonymous], 62 NY2d 183; Matter of Hynes v Karassik, 47 NY2d 659; Matter of Cunningham v Nadjari, 39 NY2d 314.) III. Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) is bad policy. (Flushing Natl. Bank v Municipal Assistance Corp. for City of N.Y., 40 NY2d 731.)

      Hinman Straub P.C., Albany (Bartley J. Costello, III, David W. Novak and Patrick J. O’Keeffe of counsel), for Association of Justices of the Supreme Court of the State of New York and another, amici curiae.
    I. Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) exceeds the Chief Administrator’s powers, which are limited to those expressly delegated or provided by law. (Matter of Morgenthau v Cooke, 56 NY2d 24; Byrnes v County of Monroe, 129 AD2d 229; People ex rel. Peck v Board of Supervisors of Genesee County, 61 App Div 545, 168 NY 640; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 87 NY2d 191.) II. The Chief Administrator’s “administrative” authority must yield to the Legislature’s reserved power to regulate practice and procedure in the courts. (Matter of Morgenthau v Cooke, 56 NY2d 24; People v Perry, 27 AD2d 154; Byrnes v County of Monroe, 129 AD2d 229; Matter of Director of Assigned Counsel Plan of City of N.Y. [Bodek], 159 Misc 2d 109, 207 AD2d 307, 87 NY2d 191; People v Elliot, 98 Misc 2d 424; Matter of Werfel v Agresta, 36 NY2d 624.) III. Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) invades the traditional purview of the courts. (Matter of Morgenthau v Cooke, 56 NY2d 24; Balogh v H.R.B. Caterers, 88 AD2d 136; Michel v Michel, 31 AD2d 313; Matter of Wright v County of Monroe, 45 AD2d 932; People v Brisman, 173 Misc 2d 573.)

      Jonathan E. Gradess, Albany, Richard D. Willstatter, Joshua L. Dratel and Stephanie J. Batcheller for New York State Defenders Association and others, amici curiae.
    The exercise of fee-setting authority by a trial court pursuant to County Law §§ 722-b and 722-c is not the exercise of court administrative business and not subject to regulation by rule of the Chief Administrative Judge. (Gideon v Wainwright, 372 US 335; People v Witenski, 15 NY2d 392; Matter of Smiley, 36 NY2d 433; Matter of Met Council v Crosson, 84 NY2d 328; Durante v Evans, 94 AD2d 141; Corkum v Bartlett, 46 NY2d 424; Matter of Werfel v Agresta, 36 NY2d 624; People v Fortune, 178 Misc 2d 499; Byrnes v County of Monroe, 129 AD2d 229; Matter of Kindlon v County of Rensselaer, 158 AD2d 178.)
   OPINION OF THE COURT

Per Curiam.

The issue presented in this appeal is whether the Chief Administrative Judge acted within the authority granted him by the New York State Constitution when he amended section 127.2 (b) of the Rules of the Chief Administrator of the Courts (22 NYCRR 127.2 [b]). As amended, the rule permits an administrative judge to review an order of a trial judge setting an award of compensation in excess of the statutory limits set forth in section 722-b of the County Law. We conclude that the Chief Administrative Judge acted within his authority and declare that section 127.2 (b) is valid.

Article 18-B of the County Law requires all counties to maintain a plan to provide counsel to individuals charged with a crime or who are otherwise statutorily entitled to representation (County Law § 722). One manner in which a county may furnish representation is through a bar association plan in which the services of private counsel are rotated and coordinated by an administrator (the Assigned Counsel Plan) (County Law § 722 [3]). Section 722-b of the County Law governs the compensation rates for attorneys who participate in the Assigned Counsel Plan. During the period relevant to this case, County Law § 722-b provided that attorneys participating in the Assigned Counsel Plan be compensated at a rate not to exceed $25 per hour for work performed outside of court and $40 per hour for work performed in court, plus reasonable expenses. The provision further imposed a cap of $800 for misdemeanor cases and $1,200 for felony cases and all appellate matters. However, upon application to the court, compensation in excess of these statutory limits could be paid upon a showing of “extraordinary circumstances.” (County Law § 722-b [3].)

These assigned counsel rates, in effect since 1986, have worked a hardship upon the assigned counsel system as the number of attorneys willing to participate in the program severely decreased because the fees were inadequate. At the same time, the number of individuals in need of assigned representation increased, causing many trial courts to struggle to find attorneys willing to represent indigent defendants in criminal proceedings. There arose a growing concern that the lack of attorneys available to represent indigent criminal defendants threatened to deny such individuals their federal and state constitutional rights. To alleviate the problem, a number of trial judges authorized enhanced compensation awards for assigned counsel. These judges concluded that the loss of attorneys from the assigned counsel panels due to the existing rate structure constituted an extraordinary circumstance justifying an enhanced hourly rate to ensure the availability of qualified attorneys to provide constitutionally required representation.

This practice prompted protests from localities responsible for paying these enhanced awards. There was, however no mechanism to review these enhanced awards, either judicially or administratively. In 2001, after consulting with the Administrative Board of the Courts, the Chief Administrative Judge amended section 127.2 to vest the power to review these awards with the appropriate administrative judge. Specifically, the Chief Administrative Judge amended section 127.2 (b) to give administrative judges the power to review enhanced awards, with or without application, and to modify an award “if it is found that the award reflects an abuse of discretion by the trial judge.”

Plaintiffs Leonard Levenson, Richard A. Siracusa and James H. Tatem are all criminal defense attorneys who participate in the Assigned Counsel Plan, Felony Panel for the County of New York, representing indigent defendants in criminal proceedings. As relevant here, plaintiffs were appointed to represent indigent defendants in five separate criminal proceedings. In each of the underlying proceedings, plaintiffs submitted applications to the presiding trial judge requesting compensation in excess of the statutory limit, and in each instance the respective trial judge determined that extraordinary circumstances warranted an upward departure from the statutory rates. One Justice ordered compensation for Levenson at an hourly rate of $75 for work performed in and out of court, for an aggregate compensation of $10,462.50. Upon Levenson’s application in a separate trial, another Justice ordered that Levenson be compensated at an hourly rate of $65 for in court work and $25 for out of court work, totaling $4,007.50. Similarly, a Justice ordered that Siracusa be paid an hourly rate of $75, for a total of $4,875. Tatem’s application for compensation in one case resulted in a Justice ordering that he be paid at a rate of $75 per hour, for a total of $2,118.75. Pursuant to an application in a separate case, another Justice ordered that Tatem be compensated at a rate of $75 per hour, for an aggregate of $3,488.35.

In each case, the Director of the Assigned Counsel Plan submitted a request for review of the enhanced fee awards to Administrative Judge Micki A. Scherer, whom the Chief Administrative Judge appointed pursuant to section 127.2 (b) to review such excess compensation awards in the Supreme Court, Criminal Term, First Judicial District. Judge Scherer modified each enhanced award by reducing the compensation to the maximum rates set forth in County Law § 722-b.

In January 2002, plaintiffs Siracusa and Tatem commenced a declaratory judgment action against defendants Jonathan Lippman, in his official capacity as Chief Administrative Judge of the Courts, Judge Scherer and the New York State Office of Court Administration challenging the constitutionality of section 127.2 (b). In May 2002, plaintiff Levenson brought a similar action, which was subsequently consolidated with the Siracusa/Tatem action pursuant to a stipulation. Plaintiffs, in their respective complaints, asserted that section 127.2 (b) “unconstitutionally permitted the establishment of an appellate court by delegating the power to review a trial court’s order to” an administrative judge.

Ruling on plaintiffs’ declaratory judgment action, Supreme Court declared that (1) in amending section 127.2 (b), the Chief Administrative Judge did not exceed the authority granted to him by the New York Constitution and the New York Legislature; (2) section 127.2 (b) is neither invalid nor unconstitutional; and (3) Judge Scherer’s orders modifying the awards of compensation granted by the trial judges are valid. Rejecting plaintiffs’ argument that the trial courts’ exercise of discretion in the award of enhanced compensation fees was not subject to review, the court, relying on Matter of Werfel v Agresta (36 NY2d 624 [1975]) and Matter of Director of Assigned Counsel Plan of City of N.Y. (Bodek) (87 NY2d 191 [1995]), stated that “compensation awarded to assigned counsel is not reviewable by the appellate courts, but can only be reviewed on an administrative level.” The court also concluded that section 127.2 (b) was validly amended pursuant to the power conferred upon the Chief Administrative Judge by article VI, § 28 (b) of the Constitution to “adopt administrative rules for the efficient and orderly transaction of business in the trial courts,” as delegated by the Chief Judge in 22 NYCRR 80.1 (b) (6).

The Appellate Division reversed Supreme Court’s judgment, vacated Judge Scherer’s orders modifying the trial courts’ excess compensation awards, reinstated the original excess compensation awards and declared section 127.2 (b) null and void. The Court concluded that the authority of the administrative judge to review the trial judges’ award of enhanced compensation provided in section 127.2 (b) was inconsistent with New York Constitution, article VI, § 30, which grants individual courts the power to adopt such rules and regulations as are “consistent with the general practice and procedure as provided by statute or general rules.” In particular, the Court stated that section 127.2 (b) violated article VI, § 30 because it usurped the Appellate Division’s authority, pursuant to CPLR 5501 (c) and 5701, to review the merits of an order of the Supreme Court. Thus, the Court held that section 127.2 (b), as amended, effectuated an unconstitutional transfer of appellate jurisdiction from the Appellate Division to administrative judges, who “lack[ ] any constitutional or statutory appellate authority and who [are] further constrained by the well-settled proscription against issuing a ruling in contravention of an order of a court of coordinate jurisdiction.” (5 AD3d 86, 87 [2004].)

Defendants appealed to this Court as a matter of right on constitutional grounds, pursuant to CPLR 5601 (b), and we now reverse the order of the Appellate Division and reinstate the judgment of Supreme Court.

In Matter of Werfel v Agresta (36 NY2d 624 [1975]), the petitioner was a participant in the Assigned Counsel Plan and was awarded compensation that fell within the statutory limits. The petitioner brought a CPLR article 78 proceeding seeking an increase in compensation. Concluding that the assignment of compensation to assigned counsel pursuant to County Law § 722-b was administrative in nature and did not concern the performance of an adjudicative function, we held that there was “no basis for justiciable review of allowances to counsel made within the máximums provided by the statute” (id. at 627). We did, however, leave open the possibility that an assigned attorney entitled to an adjustment in compensation could apply for it through the appropriate administrative judge or even to the Administrative Board of the court system (see id.).

In Matter of Director of Assigned Counsel Plan of City of N.Y. (Bodek) (87 NY2d 191 [1995]) we reaffirmed our determination that a trial judge’s award of compensation pursuant to County Law § 722-b was an administrative act not subject to judicial review. There, two trial judges awarded excess compensation to a court-appointed social worker pursuant to County Law § 722-c. After the same trial judges denied the requests from the Director of the Assigned Counsel Plan to reduce the compensation awards, the Director attempted to appeal the awards. The Appellate Division declined to consider the merits of the appeals, holding that they were not reviewable. This Court affirmed.

Initially, we noted that, as to appealability, there was no meaningful distinction between the County Law §§ 722 and 722-b assigned-counsel compensation order to be appealed in Werfel and the County Law § 722-c assigned-expert compensation orders in Bodek. We went on to hold that “[s]uch orders are essentially administrative in nature and, accordingly, are not amenable to judicial review on the merits by an appellate panel.” (87 NY2d at 194.) Finally, this Court stated, “[t]o the extent that the trial courts’ unreviewable discretion produces truly anomalous consequences or patterns of abuse in particular situations, the problem can and should be addressed through the available administrative tools.” (Id.)

We reaffirm our holdings in Werfel and Bodek today. In doing so, we disagree with the Appellate Division’s conclusion that, by promulgating section 127.2 (b), the Chief Administrative Judge unconstitutionally divested the Appellate Division of its jurisdiction to review compensation orders issued by the Supreme Court by assigning that power to administrative judges. Indeed, the Appellate Division’s holding is the very opposite of its holding in Bodek, which we affirmed. Because, under Bodek and Werfel, the appellate courts have no power to review a trial court’s excess compensation award, and this Court’s decisions contemplated administrative review of such awards, section 127.2 (b) does not confer upon an administrative judge any authority that would otherwise belong to the appellate courts.

We further conclude that the Chief Administrative Judge properly adopted section 127.2 (b) pursuant to his regulatory power under the State Constitution and the Judiciary Law. New York Constitution, article VI, § 28 (b) states:

“The chief administrator, on behalf of the chief judge, shall supervise the administration and operation of the unified court system. In the exercise of such responsibility, the chief administrator of the courts shall have such powers and duties as may be delegated to him or her by the chief judge and such additional powers and duties as may be provided by law.”

Moreover, Judiciary Law § 212 (1) states that it is the role of the Chief Administrator of the Courts to “supervise the administration and operation of the unified court system” on behalf of the Chief Judge. In the exercise of that responsibility, section 212 (1) provides that the Chief Administrator “shall have such powers and duties as may be delegated to him by” the Chief Judge.

The powers and duties of the Chief Administrative Judge, as delegated by the Chief Judge, are set forth in 22 NYCRR 80.1, which in pertinent part provides:

“(b) In the exercise of this delegated responsibility and in accordance with the standards and administrative policies established, approved and promulgated pursuant to article VI, section 28 (c) of the Constitution, the Chief Administrator shall: . . .
“(6) adopt administrative rules for the efficient and orderly transaction of business in the trial courts, including but not limited to calendar practice, in consultation with the Administrative Board of the Courts or the appropriate Appellate Divisions.”

Defendants maintain, and we agree, that with the advice and consent of the Administrative Board, the Chief Administrator properly promulgated section 127.2 (b) pursuant to his delegated authority to adopt rules for the efficient and orderly transaction of trial court business. The allocation of finite financial resources for the payment of assigned counsel is a concern for court administrators, and the Chief Administrator validly adopted section 127.2 (b) pursuant to the authority delegated to him under 22 NYCRR 80.1.

Finally, we find unpersuasive plaintiffs’ argument that section 127.2 (b) violates New York Constitution, article VI, § 30 by intruding upon the Legislature’s authority to regulate proceedings in law. More particularly, plaintiffs maintain that the regulation conflicts with the Legislature’s intent, as expressed in County Law § 722-b, to vest trial courts with exclusive authority to fix assigned counsel fees. We disagree. By making no provision in the County Law for any review of excess compensation awards, the Legislature simply created a gap in the administrative process that the Chief Administrator was entitled to fill. Otherwise, these awards would be wholly unreviewable. While plaintiffs seek this result, we cannot agree with it. Additionally, given that the award of compensation fees is an administrative rather than a judicial act of the trial judge, the Legislature could not by statute divest the Chief Administrator of his authority under New York Constitution, article VI, § 28 to supervise the administration and operation of the Unified Court System on behalf of the Chief Judge (see Matter of Met Council, Inc. v Crosson, 84 NY2d 328, 335 [1994] [where the powers of the Chief Administrator flow from the State Constitution, they cannot be abrogated by statute]).

Accordingly, the order of the Appellate Division should be reversed, with costs, and the judgment of Supreme Court reinstated.

Rosenblatt, J. (concurring).

Although I join the Court’s opinion without reservation, I write separately to acknowledge the Appellate Division’s concern&emdash;so ardently expressed in the case before us&emdash;that Rules of the Chief Administrator of the Courts (22 NYCRR) § 127.2 (b) would divest that Court of the power to review orders of the kind involved here. Although I agree that the Chief Administrative Judge had the authority to promulgate section 127.2 (b), I note that he did so only after the Legislature did not enact 1995 NY Senate Bill S 4481. Under that bill, which was introduced at the request of the Office of Court Administration on the recommendation of the Administrative Board of the Courts, the Appellate Division would have been given authority to conduct expedited reviews of enhanced payment vouchers. That would have satisfied the issues raised by the Appellate Division, while filling “a void in the . . . statutory framework” (Senate Introducer Mem in Support, 1995 NY Senate Bill S 4481), which otherwise lacked any provision for review of enhanced payment vouchers.

the supreme court, or to the chief administrator of the courts, any power possessed by the legislature to regulate practice and procedure in the courts. The chief administrator of the courts shall exercise any such power delegated to him or her with the advice and consent of the administrative board of the courts. Nothing herein contained shall prevent the adoption of regulations by individual courts consistent with the general practice and procedure as provided by statute or general rules.”

As amici, the Association of Justices of the Supreme Court of the State of New York and Association of Supreme Court Justices for the City of New York oppose section 127.2 (b), in part because it allows administrative judges to overrule the orders of other judges of “co-ordinate jurisdiction.” S 4481 would have also obviated that objection.

A decade ago, keenly sensitive to the viewpoint of the trial and appellate justices, the court administration sought passage of S 4481, which would have authorized review by the Appellate Division, instead of review by administrative judges. Because the Senate bill was never enacted, the Chief Administrative Judge exercised his powers to provide for administrative review, the only review he could institute without legislation. Given this background, the Legislature may wish to consider vesting the Appellate Division with the authority to review vouchers of this type, as contemplated by S 4481. In that fashion, the best of both worlds would be realized: filling a void in oversight and giving that oversight to an appellate tribunal.

Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur in per curiam opinion; Judge Rosenblatt concurs in a separate concurring opinion; Chief Judge Kaye taking no part.

Order reversed, etc.

      . County Law § 722-b has since been amended. Effective January 1, 2004, compensation rates for assigned counsel were increased to $75 per hour (for work performed in and out of court) for felony cases and appeals, with a maximum compensation limit of $4,400. For misdemeanor cases, the compensation rates were increased to $60 per hour, with a maximum limit of $2,400.

      . Prior to the amendment, section 127.2 (b) provided that, upon proper application to review an award of enhanced attorney’s fees, the trial judge could reconsider the award in consultation with the appropriate administrative judge. The final determination of the fees, however, remained with the trial judge.

      . New York Constitution, article VI, § 30 states:
      “The legislature shall have the same power to alter and regulate the jurisdiction and proceedings in law and in equity that it has heretofore exercised. The legislature may, on such terms as it shall provide and subject to subsequent modification, delegate, in whole or in part, to a court, including the appellate division of

       In pertinent part, the proposed legislation read,

        “Any order of a trial court determining a claim for compensation or reimbursement hereunder shall he subject to review in the court having appellate jurisdiction of the action in which the claim was made upon application of the claimant or the political subdivision upon which payment of the claim is a charge. The appellate court shall provide for the expedited determination of such application and may confirm, increase, or decrease the compensation or reimbursement awarded.”