author: Graffeo, J. Read, J. (dissenting).

text:
    [967 NE2d 1187, 944 NYS2d 742]
    Hahn Automotive Warehouse, Inc., Respondent, v American Zurich Insurance Company et al., Appellants.
    Argued February 15, 2012;
    decided March 29, 2012

      POINTS OF COUNSEL

      Damon Morey LLP, Buffalo (Michael J. Willett of counsel), for appellants.
    The statute of limitations applicable to American Zurich Insurance Company’s and Zurich American Insurance Company’s claims for nonpayment of invoices issued to Hahn Automotive Warehouse, Inc. for amounts owed under the parties’ insurance agreements began to run when Hahn failed to pay the invoiced amounts by the dates that the payments were due. (Britt v Legal Aid Socy., 95 NY2d 443; Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214; Aetna Life & Cas. Co. v Nelson, 67 NY2d 169; Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399; John J. Kassner & Co. v City of New York, 46 NY2d 544; Russack v Weinstein, 291 AD2d 439; Henry Boeckmann, Jr. & Assoc. v Board of Educ., Hempstead Union Free School Dist. No. 1, 207 AD2d 773; Micha v Merchants Mut. Ins. Co., 94 AD2d 835; Continental Cas. Co. v Stronghold Ins. Co., Ltd., 77 F3d 16; Commissioners of State Ins. Fund v SM Transp. Ltd., 11 Misc 3d 1083[A], 2006 NY Slip Op 50677[U].)

      The Wolford Law Firm LLP, Rochester (Michael R. Wolford and Lea T. Nacca of counsel), for respondent.
    American Zurich Insurance Company’s and Zurich American Insurance Company’s (Zurich) claims are time-barred because Zurich had the right to demand payment from Hahn Automotive Warehouse, Inc. more than six years before this action was commenced. (Kingsley Arms, Inc. v Copake-Taconic Hills Cent. School Dist., 9 AD3d 696, 3 NY3d 767; Albany Specialties v Shenendehowa Cent. School Dist., 307 AD2d 514; Minskoff Grant Realty & Mgt. Corp. v 211 Mgr. Corp., 71 AD3d 843; Aetna Life & Cas. Co. v Nelson, 67 NY2d 169; Town of Brookhaven v MIC Prop. & Cas. Ins. Corp., 245 AD2d 365, 92 NY2d 806; State of New York v City of Binghamton, 72 AD2d 870; Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195; Snyder v Town Insulation, 81 NY2d 429; GML, Inc. v Cinque & Cinque, P.C., 9 NY3d 949, 1016; MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640.)
   OPINION OF THE COURT

Graffeo, J.

The issue on this appeal is whether the six-year statute of limitations applicable to the insurers’ breach of contract counterclaims began to run when they possessed the legal right to demand payment from the insured or years later after they issued invoices. Under the terms of the insurance contracts in this case, we conclude that the counterclaims accrued when the insurers had the right to demand payment.

Plaintiff Hahn Automotive Warehouse, Inc., an auto parts distributor with operations in multiple states, secured general liability, automotive liability and workers’ compensation policies from defendants American Zurich Insurance Company and Zurich American Insurance Company (collectively, Zurich) for annual coverage periods between September 1992 and September 2003. Zurich also acted as the claims agent for automobile damage claims for which Hahn was self-insured from March 1997 until September 2003. The complex insurance arrangements at issue in this litigation can be broken into four general categories: (1) policies subject to retrospective premium agreements; (2) adjustable deductible policies; (3) deductible policies; and (4) claim services contracts.

Under the first category—encompassing several policies tied to retrospective premium plans—Hahn’s initial premiums were based on estimated expenses and losses. Zurich was contractually required to recalculate the premiums owed 18 months after the policies’ inception, with annual adjustments based on actual claims experience for as long as open claims remained. If an adjusted premium exceeded the initial premium, Zurich was to invoice Hahn for the difference. But if the recalculation resulted in a lesser premium than initially paid, Zurich would owe Hahn a refund. Any amounts owed by Hahn were to be paid “within ten (10) days of receipt of [Zurich’s] demand” for payment.

Similarly, the adjustable deductible policies—the second type of insurance plan used by the parties—involved the payment of an initial premium to be adjusted annually by Zurich based on actual claims experience, beginning 18 months after policy inception. These policies further required Hahn to pay deductible losses and claim expenses on a monthly or quarterly basis for 42 months, after which such losses and expenses were to be billed annually as part of the premium adjustment process.

In the third category, the deductible policies, Zurich was to pay the submitted claims but could then seek payment from Hahn on a monthly basis for the amounts that fell below the applicable deductible together with “allocated loss adjustment expenses” and other fees. These policies also required Zurich to perform an initial adjustment 18 months after policy inception, followed by yearly adjustments. The deductible policies specified that Hahn “shall pay . . . [Zurich] within twenty (20) days of its demand.”

Finally, the annual claim services contracts, constituting the fourth category, provided that Zurich would undertake claims handling duties for Hahn with respect to automobile physical damage claims in exchange for a fixed fee per claimant. The contracts also required Hahn to pay estimated fees during the terms of the agreements, with a final reconciliation to be performed by Zurich 12 months after the expiration of each agreement.

Although the contractual relationship between Hahn and Zurich commenced in the early 1990s, it was not until an internal audit of Zurich occurred in 2005 that the insurer discovered that it had not billed Hahn for claim deductibles or allocated loss adjustment expenses in connection with 10 years of claims for two deductible policies (category three policies) issued during the September 1995 to September 1996 policy period. After determining the purported amounts owed, Zurich sent Hahn an invoice in April 2005 seeking payment of $1,123,874. Hahn did not pay the bill.

Almost a year later, on March 2, 2006, Zurich sent Hahn an invoice for an additional $751,514, reflecting annual adjustments it contended were due on a variety of policies subject to the category one retrospective premium agreements and category two adjustable deductible policies. The amount billed covered adjustments on policies from March 1995 through March 2005. On March 27, 2006, Zurich presented Hahn with a third invoice for $71,615 after realizing that it had neglected to bill Hahn for fees owed under the category four claim services contracts beginning in 1997. Because Hahn failed to pay any of the invoices, Zurich drew on a $400,000 letter of credit that Hahn had previously deposited with Zurich and, over Hahn’s objection, applied that amount to the oldest of the outstanding bills.

In May 2006, Hahn commenced this action against Zurich alleging four causes of action. The first claim requested a declaration that any of Zurich’s bills for debts that arose more than six years before the commencement of the action were time-barred by the relevant statute of limitations. The remaining claims sought damages related to Zurich’s allegedly improper use of the letter of credit. Zurich counterclaimed for breach of contract based on Hahn’s nonpayment of the amounts billed in the April 2005, March 2, 2006 and March 27, 2006 invoices. Both parties moved for summary judgment.

Supreme Court granted Hahn partial summary judgment on the first cause of action, concluding that “the statute of limitations has run as to all claims for which Zurich had the right to demand payment more than six years prior to the commencement of this action” because the claims accrued when “Zurich had the right to demand payment” (30 Misc 3d 1222[A], 2009 NY Slip Op 52789[U], *4 [2009]). Although the court ruled in favor of Zurich on the letter of credit issue, holding that Zurich properly applied the $400,000 to the outstanding bills, the court did not grant Zurich summary judgment dismissing the second through fourth claims.

The Appellate Division, with one Justice dissenting in part, modified, by dismissing the second, third and fourth causes of action, and otherwise affirmed (81 AD3d 1331 [4th Dept 2011]). The majority concurred with Supreme Court that Zurich’s “counterclaims for any debt that arose more than six years prior to the commencement of this action were time-barred” (id. at 1333). The majority also agreed that Zurich properly drew on the letter of credit and therefore dismissed the second through fourth claims. The dissenter would have found that all of the amounts billed by Zurich were timely, reasoning that the six-year statute of limitations did not begin to run until Hahn refused to pay the invoices in 2005 and 2006. The Appellate Division granted Zurich leave to appeal on a certified question (83 AD3d 1602 [2011]), and we now affirm.

Zurich argues that all of the amounts billed in the three invoices are timely because the six-year statute of limitations did not begin to run until 2005 and 2006, when Zurich demanded payment and Hahn refused to pay. Hahn counters that the courts below properly concluded that Zurich’s counterclaims accrued much earlier, when it possessed the right to demand payment for the various amounts owed, such that any debts that arose before May 2000 (six years prior to the commencement of this action) are untimely.

Under CPLR 213 (2), a claim for breach of contract is governed by a six-year statute of limitations. As a general principle, the statute of limitations begins to run when a cause of action accrues (see CPLR 203 [a]), that is, “when all of the facts necessary to the cause of action have occurred so that the party would be entitled to obtain relief in court” (Aetna Life & Cas. Co. v Nelson, 67 NY2d 169, 175 [1986]). In contract actions, we have recognized that a claim generally accrues at the time of the breach (see Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399, 402 [1993]). And, we have explained further that “when the right to final payment is subject to a condition, the obligation to pay arises and the cause of action accrues, only when the condition has been fulfilled” (John J. Kassner & Co. v City of New York, 46 NY2d 544, 550 [1979]).

A consistent line of Appellate Division precedent holds that, where “the claim is for payment of a sum of money allegedly owed pursuant to a contract, the cause of action accrues when the [party making the claim] possesses a legal right to demand payment” (Minskoff Grant Realty & Mgt. Corp. v 211 Mgr. Corp., 71 AD3d 843, 845 [2d Dept 2010]; see also Kuo v Wall St. Mtge. Bankers, Ltd., 65 AD3d 1089, 1090 [2d Dept 2009]; Swift v New York Med. Coll., 25 AD3d 686, 687 [2d Dept 2006]; Kingsley Arms, Inc. v Copake-Taconic Hills Cent. School Dist., 9 AD3d 696, 698 [3d Dept 2004], Iv dismissed 3 NY3d 767 [2004]; Albany Specialties v Shenendehowa Cent. School Dist., 307 AD2d 514, 516 [3d Dept 2003]). In other words, the statute of limitations in these cases was triggered when the party that was owed money had the right to demand payment, not when it actually made the demand.

We agree with Hahn and the Appellate Division majority that it is reasonable to apply this accrual principle to the insurance contracts at issue here and therefore conclude that the statute of limitations on Zurich’s counterclaims began to run when it acquired the right to demand payment of the various amounts owed under the policies. Zurich acknowledges that it had the right under its contracts to bill Hahn years earlier for many of the sums reflected in the April 2005, March 2, 2006 and March 27, 2006 invoices—in some instances more than a decade earlier—but failed to do so through inadvertence. Hence, the courts below properly determined that any debts for which Zurich had the legal right to demand payment prior to May 2000, i.e., more than six years before the commencement of this action, are time-barred. To hold otherwise would allow Zurich to extend the statute of limitations indefinitely “by simply failing to make a demand” (Town of Brookhaven v MIC Prop. & Cas. Ins. Corp., 245 AD2d 365, 365 [2d Dept 1997], Iv denied 92 NY2d 806 [1998]; see also State of New York v City of Binghamton, 72 AD2d 870, 871 [3d Dept 1979] [“The Statute of Limitations begins to run when the right to make the demand for payment is complete, and the plaintiff will not be permitted to prolong the Statute of Limitations simply by refusing to make a demand”]).

Finally, we are unpersuaded by Zurich’s assertion that, consistent with John J. Kassner & Co., its counterclaims could not have accrued until it sent the three invoices between April 2005 and March 2006 because its right to payment under the policies was subject to a condition precedent—Zurich’s issuance of a demand for payment. Unlike John J. Kassner & Co., where the plaintiffs right to payment was expressly conditioned on an audit by a third party, Zurich cannot point to any contract

language unambiguously conditioning its right to payment on its own demand (see generally MHR Capital Partners LP v Presstek, Inc., 12 NY3d 640, 645 [2009] [stating that the use of terms like “if,” “unless” and “until” would constitute “unmistakable language of condition”] [internal quotation marks and citation omitted]). Furthermore, the contracts contain specific references to the applicable time periods when Zurich was entitled to calculate adjustments and bill Hahn for the amounts owed. Such provisions contradict the open-ended arrangement now proposed by Zurich.

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

Read, J. (dissenting).

Plaintiff Hahn Automotive Warehouse, Inc. (Hahn) does not contest the amount of the moneys that it owes defendants American Zurich Insurance Company and Zurich American Insurance Company (collectively, Zurich) under the various insurance contracts at issue in this case, which called for amounts owed to be adjusted upward or downward retrospectively, principally to reflect actual loss and cost experience. Instead, Hahn argues that Zurich may not recover this acknowledged debt, reflected in three invoices issued between April 2005 and March 2006, because of the expiration of CPLR 213 (2)’s six-year statute of limitations for breach of contract claims.

The majority agrees with Hahn, holding that Zurich’s claims are time-barred because it “possessed the legal right” under the insurance contracts “to demand payment” from Hahn more than six years before the invoices were actually sent (majority op at 767). But courts have heretofore uniformly concluded (as did the dissenter below) that the statute of limitations for a claim for unpaid premiums calculated on the basis of claims history does not accrue until the insured refuses payment after demand has been made by the insurer. A breach, if any, would only occur when a due date passes without payment being made. To hold otherwise, as the majority does, creates an illogical situation whereby a claim for breach of contract accrues before the insured knows whether it owes the insurer any money at all, much less how much. In other words, the claim for breach accrues before any breach can possibly occur. Accordingly, I respectfully dissent.

Under the policies at issue, Hahn paid premiums to Zurich and, when loss history became known, Zurich adjusted the various amounts owed under the policies to reflect actual losses and costs. In some cases, Hahn would owe additional moneys to Zurich. In others, a refund would be due Hahn. The majority is “unpersuaded by Zurich’s assertion that” in light of these contractual arrangements “its counterclaims could not have accrued until it sent the three invoices . . . because its right to payment under the policies was subject to a condition precedent—Zurich’s issuance of a demand for payment” (majority op at 771).

The source of the majority’s skepticism is the absence of “any contract language unambiguously conditioning [Zurich’s] right to payment on its own demand,” and the presence in the contracts of “specific references to the applicable time periods when Zurich was entitled to calculate adjustments and bill Hahn for the amounts owed” (id.). As to the first point, Zurich was not in a position under the contracts to demand payment until it determined that Hahn owed additional moneys. And this determination was based on computations carried out by Zurich in conformity with the complex claims adjustment formulae specified in the contracts. By their very nature and structure, then, these contracts conditioned payment upon demand; otherwise, there was no way for Hahn to know whether or how much additional moneys it owed.

Further, the Retrospective Premium Agreement, for example, explicitly provided that

“[b]ased upon the selection of the Annual Policy Period Option . . ., [Zurich] shall compute and [Hahn] shall pay to [Zurich] within ten (10) days of the receipt of its demand therefore, Earned Retrospective Premium based upon Incurred Losses valued as of a date six (6) months after the expiration of each such period, as soon as practicable after such valuation. Additional Earned Retrospective Premium Adjustments shall be computed by [Zurich] based upon Incurred Losses valued annually thereafter as soon as practicable after such valuation dates, payable within ten (10) days of receipt of its demand therefore, until such time as [Zurich] shall designate an adjustment as being final.”

The majority takes the position, as I understand it, that under this provision, Zurich had “the legal right to demand payment” for losses and expenses as they factored into the adjustment for the year in which the losses were paid and the expenses incurred; therefore, Zurich was foreclosed by the statute of limitations from recovering for such losses or expenses if it waited more than six years before taking them into account.

But the insurance contracts in this case essentially created a running tally of debits and credits, which remained open until such time as all claims or expenses for a particular policy year were resolved—or, in the words of the above-cited provision, until Zurich “designated] an adjustment as being final.” It was only at this point, when the final amount of a retrospective premium could be calculated, that a claim would accrue under these policies in the absence of a demand for payment (see e.g. 6-35 Holmes’ Appleman on Insurance 2d § 35.3 [with respect to retrospective premiums, “(c)ourts hold that any statute of limitations does not begin to run until a final premium may be calculated under the express terms of the applicable agreement”], citing National Union Fire Ins. Co. of Pittsburgh, Pa. v LSB Indus., Inc., 296 F3d 940 [10th Cir 2002]). No other court considering the accrual of claims arising under insurance contracts that involve a retrospective premium or are otherwise adjustable has taken a position, under New York law or otherwise, comparable to the majority’s (see e.g. Continental Ins. Co. v Coyne Intl. Enter. Corp., 700 F Supp 2d 207 [ND NY 2010] [cause of action for recovery of unpaid retrospective insurance premium adjustment accrued when insured refused to pay invoice]; Reliance Ins. Co. v Griffin Dewatering Corp., 2007 WL 1165557, 2007 US Dist LEXIS 29110 [ND Ind 2007] [same]; Potomac Ins. Co. of Ill. v Richmond Home Needs Servs., Inc., 2006 WL 2521283, 2006 US Dist LEXIS 62224 [SD NY 2006] [same]; Liberty Mut. Ins. Co. v Precision Valve Corp., 402 F Supp 2d 481 [SD NY 2005] [same]; Transportation Ins. Co. v Star Indus., Inc., 2005 WL 1801671, 2005 US Dist LEXIS 43121 [ED NY 2005] [where workers’ compensation policy provided for payment of retrospective premium based on claims experience, cause of action for unpaid premiums accrued at time of adjustment]; Temploy, Inc. v Companion Prop. & Cos. Ins. Co., 2008 WL 4495782, 2008 US Dist LEXIS 78572 [SD Ala 2008] [in retrospective rated insurance policies, a cause of action for wrongful assessment of a premium accrues on the date the payment is due, but refused]; Brookshire Grocery Co. v Bomer, 959 SW2d 673 [Tex Ct App 1997] [where policy had a retrospective premium endorsement, cause of action accrued when final payment was demanded by the insurer]; cf. Continental Cas. Co. v Stronghold Ins. Co., Ltd., 77 F3d 16, 22 [2d Cir 1996] [where reinsured waited more than six years after settling last of claims before tendering claims to reinsurers, “(its) losses were due and payable, and its causes of action accrued, only after it reported the losses to the reinsurers, and the reinsurers denied coverage”]).

Notably, the majority did not cite a single decision to support its position except Travelers Ins. Co. v Jacob C. Mol, Inc. (898 F Supp 528, 531 [WD Mich 1995]). But that case addressed when a claim accrued under Michigan law against a corporation’s director for unlawfully dissolving the corporation and distributing its assets to shareholders without first paying a corporate debt; specifically, Travelers’ retrospective insurance premium. The court held that Travelers’ claim accrued on the date the director approved the unlawful distribution, noting that “the lawsuit against [the director] is for failure to provide for the obligation as distinguished from a suit on the obligation itself’ (id. at 531).

The majority seems troubled at the prospect that an insurer might unduly delay the running of the statute of limitations by failing to perform or bill for adjustments in a timely manner. In this case, Zurich undertook an extensive audit of accounts, which uncovered the previously unbilled losses and expenses accounted for in the three invoices. In addition, Hahn’s agent disputed, or at least said that he did not understand, some of the invoices that Zurich forwarded, which held up reconciliation and billing. But as Zurich points out, Hahn does not claim to have been injured by these delays and no longer questions the accuracy of the amounts computed; Hahn was well aware that it owed Zurich money, having been alerted by specific advice from its broker and his periodic reports, which compared paid loss billings to loss runs. For example, for several years these reports showed that Hahn had not been billed for losses under the general liability and automobile liability program for the period 9/30/95 to 9/30/96. As Zurich remarks, a ruling in its favor is unlikely to “encourage parties who are owed money to refrain from sending out bills in the hope of prolonging the statute of limitations.”

Finally, the majority cites Town of Brookhaven v MIC Prop. & Cas. Ins. Corp. (245 AD2d 365 [2d Dept 1997]) and State of New York v City of Binghamton (72 AD2d 870 [3d Dept 1979]) for the proposition that Zurich should not be permitted to prolong the statute of limitations by neglecting to make a demand for payment. But these are both construction cases where services were performed and payment was then due at a particular time, not a contractual relationship like this one, which contemplates ongoing reconciliation of credits and debits until such time as all the claims arising in the year covered by a policy have been resolved, and a final adjustment made.

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

Order, insofar as appealed from, affirmed, etc.

      . Zurich previously sent Hahn adjustment invoices for these policies in 1998,1999 and 2003, but Hahn did not pay them because it did not understand the complex calculations. Zurich voided those bills when it submitted the March 2, 2006 adjustment invoice.

      . In June 2006, Zurich submitted a fourth invoice to Hahn relating to additional adjustments pertaining to policies subject to the category one retrospective premium agreements and category two adjustable deductible polices. This invoice reflected a net refund to Hahn of $262,480, which Zurich refused to credit because Hahn had failed to pay the previous three bills.

      . Because Hahn did not cross-appeal, the Appellate Division’s dismissal of the second through fourth claims on Zurich’s use of the letter of credit is not before us.

      . Counterclaims are “deemed interposed when the plaintiff filed the main action” (Siegel, NY Prac § 48, at 67 [5th ed]; see also CPLR 203 [d]).

      . We reject Zurich’s contention, accepted by the dissent, that we should adopt an accrual-upon-demand rule for the retrospective insurance arrangements at issue. Although the insurance policies and adjustment formulas were complex, Zurich does not dispute that it had the ability to calculate the relevant adjustments and submit invoices years earlier, but failed to do so through its own oversight. In support of an accrual-upon-demand rule, the dissent cites a number of federal district court cases, including Continental Ins. Co. v Coyne Inti. Entertainment Corp. (700 F Supp 2d 207 [ND NY 2010]), Potomac Ins. Co. of III. v Richmond Home Needs Servs., Inc. (2006 WL 2521283, 2006 US Dist LEXIS 62224 [SD NY 2006]) and Liberty Mat. Ins. Co. v Precision Valve Corp. (402 F Supp 2d 481 [SD NY 2005]). But each of these cases provided little analysis, relying instead on an Appellate Division case that involved neither an insurance agreement nor a sum of money owed by one party to another pursuant to a contract (see Russack v Weinstein, 291 AD2d 439 [2d Dept 2002]). Moreover, the dissent’s citation to Continental Cas. Co. v Stronghold Ins. Co., Ltd. (77 F3d 16 [2d Cir 1996]) is misplaced. Continental involved a claim by a reinsured against reinsurers, wherein the Second Circuit held that the reinsured’s obligation to give notice to the reinsurers of the underlying claims was a condition precedent to payment, reasoning that such conditions are common in insurance contracts because they “allow[ ] the insurance company time to investigate and pay the claim” (id. at 20). Here, in contrast, the relevant policies contain no condition precedent and Zurich did not need to give Hahn any time to investigate. Finally, although the case law is sparse, we note that there is precedent contrary to the dissent’s accrual-upon-demand rule in the context of retrospective insurance agreements (see Travelers Ins. Co. v Jacob C. Mol, Inc., 898 F Supp 528, 531 [WD Mich 1995] [“Travelers argues that the claim could not accrue until it sent its bill for the premium. However, . . . Travelers conceded that there is no duty on Travelers to send its retrospective premium notice at any fixed point in the future. Thus, theoretically, Travelers could keep an account open for many years before sending its bill and, under its theory, delay indefinitely the accrual of its claim. This would, of course, put the operation of the statute of limitations under the sole control of Travelers”]).


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [967 NE2d 1177, 944 NYS2d 732]
    William Corsello et al., Respondents-Appellants, v Verizon New York, Inc., Formerly Known as New York Telephone Company, et al., Appellants-Respondents.
    Argued February 14, 2012;
    decided March 29, 2012

      POINTS OF COUNSEL

      Kirkland & Ellis LLP (Patrick F. Philbin of the District of Columbia bar, admitted pro hac vice, of counsel) and Kirkland & Ellis LLP, New York City (Joseph Serino, Jr., of counsel) for appellants-respondents.
    I. The court below erred in holding that the complaint states a claim for inverse condemnation. (O’Brien v City of Syracuse, 54 NY2d 353; Smith v Town of Long Lake, 40 AD3d 1381; Feder v Village of Monroe, 283 AD2d 548; Bunke v New York Tel. Co., 110 App Div 241, 188 NY 600; Antonopulos v Postal Tel. Cable Co., 261 App Div 564; Powers v State Line Tel. Co., 116 App Div 737; Little v American Tel. & Tel. Co., 96 App Div 559; Curwin v Verizon Communications [LEC], 35 AD3d 645; Cassata v New York New England Exch., 250 AD2d 491; Tusa v Cablevision, 262 AD2d 306.) II. The Appellate Division erred by failing to dismiss plaintiffs’ General Business Law § 349 claim. (Haberbush v Christensen, 103 AD2d 996; Sheehan v County of Suffolk, 67 NY2d 52; D & Z Holding Corp. v City of N.Y. Dept. of Fin., 179 AD2d 796; Donnelly v Margolis, 265 AD2d 523; City of New Rochelle v Echo Bay Waterfront Corp., 268 App Div 182; Sisters of St. Dominic v Orange & Rockland Power Co., 79 AD2d 1021; Oswego Laborers’ Local 214 Pension Fund v

      Marine Midland Bank, 85 NY2d 20; Schneckloth v Bustamonte, 412 US 218; City of New York v Smokes-Spirits.Com, Inc., 12 NY3d 616; Gaidon v Guardian Life Ins. Co. of Am., 96 NY2d 201.) III. The Appellate Division erred by failing to dismiss the unjust enrichment claim as duplicative of trespass. (Town of Wallkill v Rosenstein, 40 AD3d 972; Feder v Village of Monroe, 283 AD2d 548; Brick v Cohn-Hall-Marx Co., 276 NY 259; Amodeo v Kolodny, P.C., 35 AD3d 773; Tenamee v Schmukler, 438 F Supp 2d 438; Granchelli v Johnson Bldg. Co., 85 AD2d 891; Sarniento v World Yacht Inc., 10 NY3d 70.)

      Law Offices of David M. Wise, P.A., Cranford, New Jersey (David M. Wise of counsel), and Reilly Like & Tenety, Babylon (Irving Like of counsel), for respondents-appellants.
    I. Verizon New York, Inc.’s arguments for dismissing plaintiffs’ unjust enrichment, inverse condemnation and deceptive trade practices causes of action lack merit. (Butler v Frontier Tel. Co., 186 NY 486; Cornwell v Sanford, 222 NY 248; Deposit Guaranty Nat. Bank v Roper, 445 US 326; White v Mathews, 559 F2d 852; Weiss v Regal Collections, 385 F3d 337; Miller v Schloss, 218 NY 400; United States v Lynah, 188 US 445; United States v Great Falls Mfg. Co., 112 US 645; Evans v City of Johnstown, 96 Misc 2d 755, 97 AD2d 1; New York State Energy Research & Dev. Auth. v Nuclear Fuel Servs., Inc., 561 F Supp 954.) II. The Appellate Division erred in holding plaintiffs’ inverse condemnation cause of action barred by the statute of limitations. (O’Meara v Postal Tel.-Cable Co., 279 NY 282; Antonopulos v Postal Tel. Cable Co., 261 App Div 564, 287 NY 712; Consumers Union of US., Inc. v State of New York, 5 NY3d 327; Nollan v California Coastal Comm’n, 483 US 825; United States v General Motors Corp., 323 US 373; Loretto v Teleprompter Manhattan CATV Corp., 53 NY2d 124, 458 US 419.) III. The denial of class certification was erroneous and should be reversed. (Bunke v New York Tel. Co., 110 App Div 241, 188 NY 600; Curwin v Verizon Communications [LEC], 35 AD3d 645; Cassata v New York New England Exch., 250 AD2d 491; Wash-o-Matic Laundry Co., Inc. v 621 Lefferts Ave. Corp., 191 Misc 884; Clark v Strong, 105 App Div 179; Galway v Metropolitan El. Ry. Co., 128 NY 132; Ferguson v Village of Hamburg, 272 NY 234; New York City v Pine, 185 US 93; H. Muehlstein & Co. v Airway Cleaners & Dyers, 17 Misc 2d 941.)
   OPINION OF THE COURT

Smith, J.

Defendant Verizon New York, Inc. (Verizon) attached a box to a building that plaintiffs own, and used the box to transmit telephone communications to and from Verizon’s customers in other buildings. Plaintiffs claim that Verizon took their property without paying them just compensation, and deceived them into believing that no compensation was owed.

We hold that plaintiffs have stated a valid “inverse condemnation” claim for just compensation, and that that claim is not time-barred. However, their claim for an alleged violation of General Business Law § 349 is barred by the statute of limitations, and their unjust enrichment claim is legally insufficient. We also hold that the courts below properly denied plaintiffs’ motion for class certification.

I

Plaintiffs own an apartment building in Brooklyn. Many years ago, Verizon’s predecessor, the New York Telephone Company, attached to that building a “terminal box” or “rear wall terminal.” According to plaintiffs’ complaint, boxes of this kind serve to connect Verizon’s “Block Cable”—a single cable serving a number of customers typically located within a single city block—to “Station Connection wires,” which “radiate out” from the box to several buildings in which Verizon customers are found. The complaint alleges that such a box is typically fed by “one or more Block Cables” and is “the termination point of between 25 to 200 individual Station Connection wires.” Thus the box on plaintiffs’ building enables Verizon to furnish telephone service not just to that building, but to a number of others. Plaintiffs claim, in substance, that Verizon is using their building as a substitute for a telephone pole, without paying plaintiffs for the privilege.

Plaintiffs also claim that Verizon tricked them into tolerating the box on their property without seeking payment. The complaint asserts that Verizon “never disclosed” that plaintiffs had a right to compensation and “created the false impression” that Verizon had a right to attach the box “as a condition for providing service to the building.” This allegation was made more specific in deposition testimony: plaintiff William Corsello said that a Verizon representative told him in 1986 that Verizon “had a right” to put the box on the wall.

Plaintiffs brought this lawsuit seeking damages and injunctive relief on behalf of themselves and all other building owners similarly situated. The complaint asserts that plaintiffs are entitled to relief on four theories: inverse condemnation; unjust enrichment; trespass; and deceptive trade practices in violation of General Business Law § 349. Verizon moved to dismiss the complaint. Supreme Court dismissed the unjust enrichment claim, but upheld the claims for inverse condemnation, trespass and violation of the General Business Law (21 Misc 3d 1116[A], 2008 NY Slip Op 52081[U] [2008]). In a later order, Supreme Court denied plaintiffs’ motion to certify the case as a class action (25 Misc 3d 1221 [A], 2009 NY Slip Op 52232[U] [2009]).

Verizon did not pursue an appeal from so much of Supreme Court’s first order as sustained plaintiffs’ trespass claim; that claim remains pending in Supreme Court. As to the other asserted grounds for relief, the Appellate Division modified Supreme Court’s first order, and affirmed it as modified. The Appellate Division agreed with Supreme Court that plaintiffs had stated a legally sufficient inverse condemnation claim, but dismissed that claim as barred by the statute of limitations. It reinstated the unjust enrichment claim, and affirmed so much of the order as upheld the General Business Law claim (Corsello v Verizon N.Y., Inc., 77 AD3d 344 [2d Dept 2010]). In a separate decision on the same day, the Appellate Division affirmed Supreme Court’s order denying class certification (Corsello v Verizon N.Y., Inc., 76 AD3d 941 [2d Dept 2010]).

The Appellate Division granted leave to appeal from both of its orders. We now modify the order that addressed Verizon’s motion to dismiss, reinstating the inverse condemnation claim but dismissing the other two claims that are before us. We affirm the order denying class certification.

II

We agree with both of the courts below that plaintiffs’ complaint states a valid inverse condemnation claim.

It is undisputed that, under Transportation Corporations Law § 27, Verizon has the power to take plaintiffs’ property for the purpose of attaching its cables and wires. Section 27 says, in relevant part:

“Any such corporation may erect, construct and maintain the necessary fixtures for its lines upon, over or under any of the public roads, streets and highways . . . , and may erect, construct and maintain its necessary stations, plants, equipment or lines upon, through or over any other land, subject to the right of the owners thereof to full compensation for the same. If any such corporation can not agree with such owner or owners upon the compensation to be paid therefor, such compensation shall be ascertained in the manner provided in the eminent domain procedure law.”

In their inverse condemnation claim, plaintiffs assert that Verizon has de facto exercised its section 27 power, and taken plaintiffs’ property, by attaching its “equipment” and “lines” to their building. Plaintiffs sue for the “compensation” for this taking to which they say they are entitled under section 27 and the takings clauses of the State and Federal Constitutions. The courts below held this claim to be legally sufficient, relying on Loretto v Teleprompter Manhattan CATV Corp. (458 US 419 [1982]), in which the United States Supreme Court decided that the installation of cables on the roof of an apartment building by a cable television company acting pursuant to authority granted by a state statute was a taking in the constitutional sense.

Verizon argues that inverse condemnation is not an available remedy because plaintiffs have alleged at most a trespass, not a taking of their property. Loretto is distinguishable, Verizon argues, because the cable television company in Loretto not only had a statutory right to install its equipment, but had expressly invoked that right. According to Verizon, unless it has affirmatively chosen to take plaintiffs’ property under section 27, or unless it has inflicted an injury on the property that “is incapable of actual, physical repair and, therefore, in its nature and of necessity permanent” (Dietzel v City of New York, 218 NY 270, 272 [1916]), it has committed no more than a trespass and cannot be sued for inverse condemnation. Verizon’s argument rests on an outmoded understanding of the relationship between inverse condemnation and trespass.

“Inverse condemnation” is a term relatively new to the law of eminent domain. Originally, at least as used by New York courts, it described not an independent basis for a lawsuit, but an equitable remedy given in actions for trespass when the trespasser had, but had not exercised, the power to condemn the property in question. In Pappenheim v Metropolitan El. Ry. Co. (128 NY 436 [1891]), we considered a trespass action in which plaintiff sought an injunction and damages based on the operation of a railway in front of her property that interfered with her easement of light, air and access. Though the defendants were authorized to exercise the right of eminent domain and thus to acquire the easement, they had not done so and had paid plaintiff no compensation. In such a case, we said, the owner was entitled to damages for trespass, but was not limited only to a monetary remedy:

“[T]he owner may resort to equity for the purpose of enjoining the continuance of the trespass, and to thus prevent a multiplicity of actions at law to recover damages; and in such an action the court may determine the amount of damage which the owner would sustain if the trespass were permanently continued, and it may provide that, upon payment of that sum, the plaintiff shall give a deed or convey the right to the defendant, and it will refuse an injunction when the defendant is willing to pay upon the receipt of a conveyance. The court does not adjudge that the defendant shall pay such sum and that the plaintiff shall so convey. It provides that, if the conveyance is made and the money paid, no injunction shall issue. If defendant refuse to pay, the injunction issues.” (Id. at 444.)

Thus under Pappenheim the trespasser could be given a choice: condemn and pay for the property, or accept an injunction against the trespass. We did not label this remedy as “inverse condemnation” in Pappenheim; we first used that term more than 40 years later, in Ferguson v Village of Hamburg (272 NY 234, 240 [1936]), where we said that the method approved in Pappenheim and similar cases “of expeditiously disposing of the entire matter in a court of equity” was “sometimes termed ‘inverse condemnation.’ ” Over the next several decades, the term was occasionally used in the same sense (see Trippe v Port of N.Y. Auth., 17 AD2d 472, 474 [2d Dept 1962], read, on other grounds 14 NY2d 119 [1964]; Boomer v Atlantic Cement Co., 26 NY2d 219, 230 [1970, Jasen, J., dissenting]); it was also used during that time to refer to a remedy sought by a trespasser that sought to exercise its eminent domain power, rather than being compelled to vacate the property (see Heyert v Orange & Rockland Utils., 24 AD2d 592 [2d Dept 1965], affd 17 NY2d 352 [1966]; New York Tel. Co. v Town of N. Hempstead, 41 NY2d 691, 696 [1977]). In all these cases, inverse condemnation was conceived of as a remedy available only by the choice of the condemnor, as an alternative to other relief.

In more recent times, however, inverse condemnation has acquired what is now its accepted meaning: it describes “the manner in which a landowner recovers just compensation for a taking of his property when condemnation proceedings have not been instituted” (United States v Clarke, 445 US 253, 257 [1980]). A leading treatise explains:

“State courts have defined ‘inverse condemnation’ . . . as a cause of action against a governmental defendant to recover the value of property that has been taken in fact by the governmental defendant, even though no formal exercise of the power of eminent domain has been attempted by the taking agency” (3-8 Nichols, Eminent Domain § 8.01 [5] [b] [i] [3d ed rev 2011] [footnote omitted]).

In a modern inverse condemnation action, an owner whose property has been taken de facto may sue the entity that took it to obtain just compensation, and if the action is successful the defendant has no choice in the matter—the compensation must be paid. As the Appellate Division explained in Tuffley v City of Syracuse (82 AD2d 110, 116 [4th Dept 1981]):

“Use of private property ... by a municipality in such a manner as to amount to a compensable taking is actionable, and a continuous, permanent trespass may constitute a de facto taking. . . . Inverse condemnation, rather than trespass, is the appropriate theory for granting damages to an injured landowner where the trespasser is cloaked with the power of eminent domain.” (Citations omitted.)

Verizon’s argument here—that inverse condemnation is normally available only when an entity has chosen to exercise its eminent domain power—in effect invites us to reject the more modern understanding of inverse condemnation, and to return to the time when that term described an option that might be given to a trespasser, either to vacate the property or to condemn it. We reject the invitation. Such a limitation on the rights of property owners would be not only inconsistent with modern authorities, but also unfair. It would invite an entity having the power of eminent domain to occupy property without risking more than damages for a temporary trespass, and to decide at a later date whether to acquire the property or abandon it. We agree with the Appellate Division in Tuffley that a “continuous, permanent trespass” may be converted into a “de facto taking.”

We do not, however, imply endorsement of Tuffley’s statement that inverse condemnation is “the appropriate remedy” where the trespasser has eminent domain power; we do not suggest, in other words, that claims for trespass and ejectment may no longer be brought in such cases. Indeed, a trespass claim, not challenged on appeal, remains pending in this case. There is no need to decide now on which, if either, of their two alternative theories—trespass and inverse condemnation—plaintiffs may recover; that will depend on whether they ultimately prove a continuous and permanent, or merely a temporary, occupation of their property. Nor do we decide anything about a case in which the parties’ arguments are reversed: We do not imply that an entity having—but not having expressly exercised—the power of eminent domain may be heard to claim, to its own advantage, that it has accomplished a de facto taking, and may not be sued for trespass or ejectment. It may well be, though we do not now decide, that there are some occupations of property that may be treated either as trespasses or takings, at the property owner’s option. And, of course, nothing we say here prevents an entity that has eminent domain power from overtly exercising that power when it wants to remain in possession of property it has occupied.

We decide here only that the complaint in this action alleges facts from which a continuous and permanent occupation of plaintiffs’ property—a de facto taking—could be found, and therefore states a legally sufficient claim for inverse condemnation.

III

The Appellate Division held that actions in inverse condemnation are governed by a three-year statute of limitations that runs from the time of the taking (see CPLR 214 [4]). Plaintiffs do not challenge that holding, and we assume (without deciding) that it is correct. On that assumption, plaintiffs’ inverse condemnation claim is time-barred unless it is saved by Real Property Law § 261. We conclude that section 261 does apply, and the claim is timely.

Real Property Law § 261 says:

“Whenever any wire or cable used for any telegraph, telephone, electric light or other electric purpose, or for the purpose of communication otherwise than by the aid of electricity, is or shall be attached to, or does or shall extend upon or over any building or land, no lapse of time whatever shall raise a presumption of any grant of, or justify a prescription of any perpetual right to, such attachment or extension.”

Verizon’s argument, which the Appellate Division accepted, is that this statute does not apply to an action for inverse condemnation based on an alleged de facto taking of property. The words “presumption of . . . grant” and “prescription of . . . perpetual right” refer, Verizon says, to a claim by a telephone company that it has acquired title to property by adverse possession, or that its long use of property has given it a prescriptive easement. Since a de facto taking involves neither of these—indeed, it involves no claim by the telephone company of any property right—section 261, in Verizon’s view, is irrelevant to the case.

Verizon’s narrow reading of the statute would defeat its purpose. The thrust of the statute is that a company may not unlawfully attach its wires or cables to private property and then, by lapse of time, deprive the property owner of any remedy for the unlawful act. When section 261 was enacted in 1909, an owner would have been expected to seek relief in an action for trespass or ejectment, in which the company might plead adverse possession or prescriptive easement as a defense. Today, as we explained above, the same facts would permit the owner to bring an inverse condemnation action, to which the company may assert a statute of limitations defense—a defense based, like adverse possession and prescriptive easement, on lapse of time. The fact that applicable legal doctrines have changed, and that new claims and defenses, with different names, are now in use should not permit a lapse-of-time defense to succeed where the authors of section 261 clearly intended it to fail. Plaintiffs’ inverse condemnation claim is not time-barred.

IV

We conclude, however, that plaintiffs’ claim under the General Business Law is barred by the statute of limitations.

General Business Law § 349 prohibits “[deceptive acts or practices in the conduct of any business, trade or commerce or in the furnishing of any service,” and allows any person injured by a violation of the section to recover damages (General Business Law § 349 [a], [h]). Plaintiffs claim that Verizon acted deceptively by attaching its box to their building without telling plaintiffs that that act entitled plaintiffs to compensation, and by falsely telling plaintiffs that Verizon had a right to affix the box. We assume (without deciding) that these allegations state a legally sufficient claim under section 349.

That claim is subject to the three-year limitations period imposed by CPLR 214 (2), which applies to actions “to recover upon a liability . . . created or imposed by statute” (Gaidon v Guardian Life Ins. Co. of Am., 96 NY2d 201, 208 [2001]). The complaint here alleges no successful deception of plaintiffs within three years of the time the action was brought, and thus Verizon’s statute of limitations defense to the General Business Law claim is prima facie valid.

The Appellate Division, relying on General Stencils v Chiappa (18 NY2d 125 [1966]) and Simcuski v Saeli (44 NY2d 442 [1978]), held that Verizon was estopped from raising a statute of limitations defense because (assuming the complaint’s allegations to be true) Verizon concealed its wrongdoing from plaintiffs and so prevented them from bringing a timely lawsuit. But General Stencils and Simcuski are not in point. In these cases, the complaints alleged both the tort that was the basis of the action and later acts of deception by which the defendants concealed their wrongdoing: In General Stencils, the defendant misappropriated the plaintiffs funds, and then used her position as the plaintiffs bookkeeper to cover up what she had done (18 NY2d at 126); in Simcuski, the defendant doctor committed malpractice and then falsely told the plaintiff that her resulting physical problems “were transient and . . . would disappear” (44 NY2d at 447). By contrast, in cases where the alleged concealment consisted of nothing but defendants’ failure to disclose the wrongs they had committed, we have held that the defendants were not estopped from pleading a statute of limitations defense (Ross v Louise Wise Sews., Inc., 8 NY3d 478, 491-492 [2007] [there must be a “later fraudulent misrepresentation . . . for the purpose of concealing the former tort”], citing Zumpano v Quinn, 6 NY3d 666, 674 [2006] [it is “fundamental to the application of equitable estoppel for plaintiffs to establish that subsequent and specific actions by defendants somehow kept them from timely bringing suit”]). Plaintiffs here have not alleged an act of deception, separate from the ones for which they sue, on which an equitable estoppel could be based.

Plaintiffs, relying on Gaidon, argue that the statute of limitations on a General Business Law § 349 action runs not from the act of deception, but from the date when the plaintiff learns, or reasonably should learn, that he or she has been deceived. But that is not what Gaidon held; it held that the statute runs from the time when the plaintiff was injured (96 NY2d at 210). In Gaidon, the alleged deception related to the likelihood of a future event: the defendants had sold life insurance to the plaintiffs, using materials showing that, after a certain date, policy dividends would be sufficient to cover the premiums. What defendants failed to disclose was that their prediction was “wholly unrealistic” (id. at 211, quoting Gaidon v Guardian Life Ins. Co. of Am., 94 NY2d 330, 350 [1999]). In that situation, we explained, the plaintiffs were not injured, and the statute of limitations did not begin to run, until the “unrealistic expectations” that defendants had raised “were actually not met” (96 NY2d at 211-212).

This case does not involve unrealistic predictions, but alleged omissions and representations about whether Verizon was entitled, without compensation, to place its box on plaintiffs’ wall. Plaintiffs’ injury was suffered when, relying on those omissions and representations, they refrained from demanding either payment or removal of the box. That occurred more than three years before suit was brought, and the General Business Law § 349 claim is time-barred.

V

We conclude that plaintiffs have not stated a valid unjust enrichment claim.

The basis of a claim for unjust enrichment is that the defendant has obtained a benefit which in “equity and good conscience” should be paid to the plaintiff (Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173, 182 [2011], quoting Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421 [1972]). In a broad sense, this may be true in many cases, but unjust enrichment is not a catchall cause of action to be used when others fail. It is available only in unusual situations when, though the defendant has not breached a contract nor committed a recognized tort, circumstances create an equitable obligation running from the defendant to the plaintiff. Typical cases are those in which the defendant, though guilty of no wrongdoing, has received money to which he or she is not entitled (see Markwica v Davis, 64 NY2d 38 [1984]; Kirby Mclnerney & Squire, LLP v Hall Chame Burce & Olson, S.C., 15 AD3d 233 [2005]). An unjust enrichment claim is not available where it simply duplicates, or replaces, a conventional contract or tort claim (Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388-389 [1987]; Sarniento v World Yacht Inc., 10 NY3d 70, 81 [2008]; Town of Wallkill v Rosenstein, 40 AD3d 972, 974 [2d Dept 2007]).

Here, plaintiffs allege that Verizon committed actionable wrongs, by trespassing on or taking their property, and by deceiving them into thinking they were not entitled to compensation. To the extent that these claims succeed, the unjust enrichment claim is duplicative; if plaintiffs’ other claims are defective, an unjust enrichment claim cannot remedy the defects. The unjust enrichment claim should be dismissed.

VI

A decision on whether to certify a case as a class action is normally reviewable by us only for abuse of discretion (City of New York v Maul, 14 NY3d 499, 509 [2010]; Small v Lorillard Tobacco Co., 94 NY2d 43, 52-53 [1999]). The courts below did not abuse their discretion in denying class certification here.

We acknowledge that the case as described in plaintiffs’ complaint, and in an expert affidavit that plaintiffs submitted, seems on its face well-suited to class action treatment. The complaint alleges that Verizon has made a practice of attaching boxes like the one in issue here to privately owned buildings in several New York City neighborhoods; and that Verizon, knowing that it is required to pay compensation when it does so, has pursued a strategy to avoid that obligation. Plaintiffs’ expert, an engineer formerly employed by Verizon, described the alleged strategy, which he labeled “attach and run”: He said that Verizon would simply begin attaching apparatus to buildings “without oral, let alone, written consent”; that if a property owner noticed what Verizon was doing, Verizon’s employees would try “to appease the owner,” but would “[i]n no event . . . volunteer” that Verizon was not within its rights or that the owner was entitled to compensation; and that after attaching a box to a building “we would simply move on to the next building, and . . . would not leave any notice behind advising the building owners of their rights.”

From these assertions, it would be reasonable to infer that the case will be dominated by class-wide issues—whether Verizon’s practice is lawful, and if not what the remedy should be. Plaintiffs’ allegations and expert testimony would also support an inference that their claims are typical of the claims of a class of building owners.

Evidence submitted by Verizon in opposition to the class certification motion, however, told a different story. Displaying an impressive ability to store and retrieve old records, Verizon submitted to Supreme Court a signed document dated February 9, 1911, saying that “[p]ermission is hereby granted” for the attachment of a “[c]able with terminal box” on the rear wall of the building plaintiffs now own. Plaintiffs say, perhaps correctly, that this document does not bind them, but it surely casts some doubt on their claim to be victims of an “attach and run” policy.

Verizon also submitted documents showing that William Corsello himself gave permission for Verizon to splice a cable on the rear wall of his building in 1978, and to move the box to another part of the wall in 1986. Though Mr. Corsello signed nothing on either occasion, his grant of oral permission was described in convincing detail—including, in 1986, the instruction to “[s]ee knife grinder on 1st fir or call owner Mr. Corsello [with his phone number] for access.” In addition, Verizon submitted the deposition of plaintiffs’ expert witness, in which, though not flatly contradicting his affidavit, the witness gave a more benign description of Verizon’s policies. He said that while employed by Verizon he “would never deceive or misrepresent to the customer”; that he “would go to the customer and tell them what I was going to do”; and that he never observed any misrepresentation or deception by his Verizon coworkers.

This evidence, and other evidence Verizon presented, casts considerable doubt on whether the practice that plaintiffs’ complaint and expert affidavit seemed to be describing—a practice of making use of private property furtively and without the property owners’ consent—existed, or was followed in the case of plaintiffs’ building. We do not imply that Verizon’s evidence necessarily defeats plaintiffs’ claims on the merits; but it at least shows that there is a substantial amount of proof specific to plaintiffs’ building, and not common to the class, that is relevant to the case. And it is fair to infer that there will also be building-specific evidence relating to property owned by many other members of the putative class.

The courts below were clearly justified, on this record, in finding that at least two of the prerequisites to a class action were not met: the requirements that there be “questions of law or fact common to the class which predominate over any questions affecting only individual members” (CPLR 901 [a] [2]) and that “the claims ... of the representative parties” be “typical of the claims ... of the class” (CPLR 901 [a] [3]). Those courts did not err in denying class certification.

Accordingly, the Appellate Division’s order modifying Supreme Court’s order addressing Verizon’s motion to dismiss (77 AD3d 344) should be modified, without costs, by reinstating plaintiffs’ inverse condemnation cause of action and dismissing plaintiffs’ General Business Law and unjust enrichment causes of action and, as so modified, affirmed, and the certified question relating to that order should be answered in the negative. The order of the Appellate Division affirming the denial of class action certification (76 AD3d 941) should be affirmed with costs, and the certified question relating to that order should be answered in the affirmative.

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

Order of modification (77 AD3d 344 [2010]) modified, without costs, by reinstating plaintiffs’ inverse condemnation cause of action and dismissing plaintiffs’ General Business Law and unjust enrichment causes of action and, as so modified, affirmed, and certified question answered in the negative. Order affirming the denial of class action certification (76 AD3d 941 [2010]) affirmed, etc.


text:
    [962 NE2d 252, 938 NYS2d 831]
    The People of the State of New York, Respondent-Appellant, v Akinlowo Omowale, Appellant-Respondent.
    Decided December 13, 2011

      APPEARANCES OF COUNSEL

      Office of the Appellate Defender, New York City (Rosemary Herbert and Richard M. Greenberg of counsel), for appellant-respondent.

      Cyrus R. Vance, Jr., District Attorney, New York City (Andrew E. Seewald of counsel), for respondent-appellant.
   OPINION OF THE COURT

Memorandum.

On defendant’s appeal pertaining to his September 2006 arrest, the order of the Appellate Division should be affirmed. The People’s appeal regarding his May 2007 arrest should be dismissed on the ground that the reversal by the Appellate Division was not “on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal” (CPL 450.90 [2] [a]).

The Appellate Division’s determination that the police reasonably could have concluded that a weapon was located in defendant’s vehicle during the September 2006 traffic stop and that the situation presented an actual and specific danger to the safety of the officers (see e.g. People v Mundo, 99 NY2d 55, 59 [2002]; People v Torres, 74 NY2d 224, 231 n 4 [1989]) was a mixed question of law and fact for which there is support in the record (83 AD3d 614 [2011]). The court’s determination is therefore beyond our further review (see e.g. People v Williams, 17 NY3d 834, 835 [2011]).

With regard to the May 2007 traffic stop, the Appellate Division reversed and ordered suppression of the seized evidence. It rejected the People’s assertion that there was probable cause to believe that defendant committed attempted criminal impersonation in the second degree. It further concluded that the facts did not provide probable cause to arrest defendant for criminal possession of stolen property because he was taken into custody before the officers learned that the license had been reported missing. It cannot be said that the reversal was “on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal” (CPL 450.90 [2] [a]). Consequently, the People’s appeal from that portion of the Appellate Division’s order must be dismissed.

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

On review of submissions pursuant to section 500.11 of the Rules of the Court of Appeals (22 NYCRR 500.11), on defendant’s appeal, order affirmed, and People’s appeal dismissed, in a memorandum.


text:
    James Knapp et al., Respondents-Appellants, v James R. Hughes et al., Appellants-Respondents.
    Submitted September 6, 2011;
    decided December 13, 2011
    Reported below, 25 AD3d 886.
   Motion by defendants for leave to appeal granted. Motion by plaintiffs for leave to appeal dismissed upon the ground that it does not lie, plaintiffs previously having moved for leave to appeal to the Court of Appeals from the January 2006 Appellate Division order from which leave to appeal is currently sought (7 NY3d 921 [2006]). Moreover, no motion by plaintiffs for leave to appeal would lie to the Court of Appeals from the July 2011 Supreme Court judgment to bring up for review the January 2006 Appellate Division order as plaintiffs have appealed that judgment to the Appellate Division and simultaneous appeals do not lie to both the Appellate Division and the Court of Appeals (see Parker v Rogerson, 35 NY2d 751, 753 [1974]).


text:
    In the Matter of Eddie James Lee, Appellant, v Mohawk Time Allowance Committee et al., Respondents. (And Another Action.)
    Submitted October 11, 2011;
    decided December 13, 2011
   Motion for leave to appeal dismissed as untimely (see CPLR 5513 [b]).


text:
    In the Matter of O., Respondent, v M., Appellant.
    Submitted November 21, 2011;
    decided December 13, 2011
    Reported below, 88 AD3d 797.
   Motion for leave to appeal granted. Motion for a stay granted.


text:
    The People of the State of New York, Respondent, v Robert J. Coffey Jr., Appellant.
    Submitted November 7, 2011;
    decided December 13, 2011
    Reported below, 77 AD3d 1202.
   Motion for an extension of the time within which to apply for permission to appeal pursuant to CPL 460.20 denied as unnecessary and motion papers treated as a timely CPL 460.20 application.


text:
    The People of the State of New York, Respondent, v Kevin O. Cooper, Appellant.
    Submitted December 5, 2011;
    decided December 13, 2011
    Reported below, 85 AD3d 1594.
   Motion for assignment of counsel granted and Timothy P. Donaher,- Esq., Monroe County Public Defender, 10 N. Fitzhugh Street, Rochester, New York 14614 assigned as counsel to the appellant on the appeal herein.


text:
    The People of the State of New York, Respondent, v Brian Gammon, Appellant.
    Submitted October 11, 2011;
    decided December 13, 2011
    Reported below, 30 Misc 3d 46.
   Motion to vacate this Court’s September 21, 2011 preclusion order granted.


text:
    The People of the State of New York, Appellant, v Rafael Lora, Respondent.
    Submitted September 6, 2011;
    decided December 13, 2011
    Reported below, 85 AD3d 487.
   Motion to dismiss the appeal granted and the appeal dismissed upon the ground that the reversal by the Appellate Division was not on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal (CPL 450.90 [2] [a]).


text:
    The People of the State of New York, Respondent, v Julio Velez, Appellant.
    Submitted November 21, 2011;
    decided December 13, 2011
    Reported below, 78 AD3d 867.
   Motion for an extension of the time within which to apply for permission to appeal pursuant to CPL 460.20 granted and motion papers treated as a timely CPL 460.20 application.


text:
    Regional Economic Community Action Program, Inc., Appellant, v Enlarged City School District of Middletown, Respondent.
    Submitted December 5, 2011;
    decided December 13, 2011
    Reported below, 79 AD3d 723.
   Motion by New York State School Boards Association, Inc. for leave to file a brief amicus curiae on the appeal herein granted and the proposed brief is accepted as filed. Two copies of the brief must be served and 24 copies filed within seven days.


text:
    In the Matter of Justo Richards, Appellant, v Andrew M. Cuomo, as Attorney General of the State of New York, Respondent.
    Decided December 13, 2011
    Reported below, 88 AD3d 1043.
   Appeal dismissed, without costs, by the Court of Appeals, sua sponte, upon the ground that no substantial constitutional question is directly involved.


text:
    In the Matter of Stephen Rosenblum, Respondent, v New York City Conflicts of Interest Board et al., Appellants.
    Submitted December 5, 2011;
    decided December 13, 2011
    Reported below, 75 AD3d 426.
   Motion by Citizens Union of the City of New York for leave to appear amicus curiae on the appeal herein granted only to the extent that the proposed brief is accepted as filed.


text:
    In the Matter of Stephen Rosenblum, Respondent, v New York City Conflicts of Interest Board et al., Appellants.
    Submitted December 5, 2011;
    decided December 13, 2011
    Reported below, 75 AD3d 426.
   Motion by Association of the Bar of the City of New York for leave to file a brief amicus curiae on the appeal herein granted and the proposed brief is accepted as filed.


text:
    In the Matter of State of New York, Respondent, v Daniel F., Appellant.
    Submitted October 31, 2011;
    decided December 13, 2011
    Reported below, 77 AD3d 1400.
   Motion to strike appendix and supplemental appendix and to direct appellant to file the record on appeal granted and appellant is directed to serve three copies of the record on appeal on respondent and file the original and eight copies with the Court.


text:
    [962 NE2d 764, 939 NYS2d 273]
    The People of the State of New York, Respondent, v Wayne R. Stewart, Appellant.
    Argued November 16, 2011;
    decided December 15, 2011

      APPEARANCES OF COUNSEL

      Anthony J. LaFache, Utica, for appellant.

      John H. Crandall, District Attorney, Herkimer (Jeffrey S. Carpenter and Jacquelyn M. Asnoe of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be modified by reducing defendant’s conviction for assault in the first degree (Penal Law § 120.10 [1]) to one for assault in the second degree (Penal Law § 120.05 [2]) and remitting to County Court for resentencing and, as so modified, affirmed.

While the assault upon which defendant’s conviction is based was serious, involving numerous blows with a sharp instrument, the resulting injuries were described in their most acute aspect by the treating emergency room physician as “superficial”; no organ damage or injury to muscle tissue was radiologically evident. Three of the victim’s four wounds required only gauze dressing. And, while the remaining six-to-seven-centimeter wound on the victim’s inner forearm was sutured, the victim spent just one day in the hospital without follow-up medical care, apart from the removal of his stitches. These injuries were not shown to be objectively “distressing or objectionable” (see People v McKinnon, 15 NY3d 311, 315 [2010]) so as to justify the conclusion that they constituted “serious . . . disfigurement” qualifying as a serious physical injury predicate for first degree assault under Penal Law § 120.10 (1) and § 10.00 (10).

Nor was serious physical injury proved upon the alternative ground set forth in the same Penal Law provisions, that the victim suffered “protracted impairment of health.” It is true that the victim complained of daily pain attributable to his healing scars, but there was no basis for the jury reasonably to conclude that these sensations, discomfiting as they may have been, were indicative of or causally related to any protracted health impairment. There was, as noted, no medical evidence of an injury even potentially giving rise to extended health impairment. And, while we do not exclude the possibility that pain may itself be disabling and result in protracted impairment of health, there was no evidence that the pain complained of by the present victim was so severe as to have had that effect; the victim did not, for example, testify as to his pain’s severity or his need to resort to palliative measures. We note in this connection that the governing definitional statute, Penal Law § 10.00 (10), provides that, apart from an injury that is protractedly health impairing, “serious physical injury” alternatively may be “physical injury which creates a substantial risk of death, or which causes death or serious and protracted disfigurement . . . [or] protracted loss or impairment of the function of any bodily organ.” It would not have been consistent with the Legislature’s evident intent in this enumeration, rigorously to require verifiable proof of serious and consequential injury, to have included in it what would amount to a catchall option for complaints of persisting discomfort unconnected to ascertainable health impairment.

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

Order modified, etc.


text:
    [962 NE2d 256, 938 NYS2d 835]
    Edward Beazer, Respondent, v New York City Health and Hospitals Corporation et al., Defendants, and Beys Contracting, Inc., Appellant.
    Argued November 15, 2011;
    decided December 15, 2011

      APPEARANCES OF COUNSEL

      Smith Mazure Director Wilkins Young & Yagerman, P.C., New York City (Joel M. Simon and Marcia K. Raicus of counsel), for appellant.

      David Horowitz, P.C., New York City (Steven J. Horowitz of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

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

Plaintiff Edward Beazer sliced his left thumb while using an unguarded angle grinder to cut a piece of exposed hollow steel tube out of a concrete floor at a construction site at Bellevue Hospital Center in New York City. At the time, plaintiff was employed by Turner Construction Company, the construction manager for the Bellevue project pursuant to a contract with the New York State Dormitory Authority (DASNY), the owner of the premises. Defendant Beys Contracting, Inc. was working on the project under a separate contract with DASNY.

Plaintiff subsequently sued New York City, the New York City Health and Hospitals Corporation (HHC) and Beys for damages, asserting causes of action for violations of Labor Law §§ 200 and 241 (6), and for common-law negligence. Supreme Court dismissed the complaint and all cross claims against the City and HHC on the ground that the State of New York owned Bellevue; and granted Beys summary judgment dismissing plaintiffs Labor Law claims (2009 NY Slip Op 31291[U] [Sup Ct, NY County 2009]). As for plaintiffs common-law negligence cause of action, Supreme Court denied Beys’s motion on the ground there were material disputed issues of fact. The Appellate Division agreed, with two Justices dissenting (76 AD3d 405 [1st Dept 2010]). Beys appeals to us by permission of the Appellate Division.

We affirm. There are unresolved factual issues bearing on whether Beys owed any duty to plaintiff with respect to the condition of the grinder. There is conflicting evidence as to whether the grinder was owned by Beys or Turner, and as to the circumstances under which plaintiff came to possess the grinder.

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

Order affirmed, etc.


text:
    [962 NE2d 257, 938 NYS2d 836]
    The People of the State of New York, Respondent, v Robert Guy Dickinson, Appellant.
    Argued November 16, 2011;
    decided December 15, 2011
    APPEARANCES OF COUNSEL

      Robert M. Winn, Granville, for appellant.

      Kevin C. Kortright, District Attorney, Fort Edward (Katherine G. Henley of counsel), for respondent.

      New York State Defenders Association, Albany (Alfred O’Connor of counsel), for New York State Defenders Association, amicus curiae.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be reversed and the indictment dismissed.

It is undisputed that the People were not ready for trial within six months of the commencement of the action, as CPL 30.30 (1) (a) requires, even after application of the exclusions listed in CPL 30.30 (4). The People’s only claim is that defendant waived his rights under CPL 30.30 by participating in plea negotiations for several months.

While a defendant may waive rights under CPL 30.30 (People v Waldron, 6 NY3d 463 [2006]), the record here contains no evidence of any waiver, written or oral. Mere silence is not a waiver. We repeat our observation in Waldron that “prosecutors would be well advised to obtain unambiguous written waivers in situations like these” (id. at 468).

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

Order reversed, etc.


text:
    Danielle Biton et al., Appellants, v Ameena Meer et al., Respondents.
    Decided December 15, 2011
   Appeal dismissed, without costs, by the Court of Appeals, sua sponte, upon the ground that it does not lie (see CPLR 5601).


text:
    In the Matter of the Arbitration Between Buffalo Professional Firefighters Association, Inc., IAFF Local 282, Respondent, and City of Buffalo, Appellant.
    Submitted November 7, 2011;
    decided December 15, 2011
    Reported below, 79 AD3d 1737.
   Motion for reargument of motion for leave to appeal denied [see 17 NY3d 854 (2011)]. An order directing further arbitration proceedings, whether before the same or a different arbitrator, is not one finally determining a proceeding within the meaning of the Constitution (Matter of SOMA Partners, LLC v Northwest Biotherapeutics, Inc., 41 AD3d 257 [2007], Iv dismissed 9 NY3d 942 [2007]; Matter of Beard v Town of Newburgh, 259 AD2d 613 [1999], Iv dismissed 93 NY2d 958 [1999]; Matter of Sachem Cent. Teachers Assn. v Board of Educ. of Sachem Cent. School Dist., 227 AD2d 632 [1996], Iv dismissed 88 NY2d 1064 [1996]). Older cases to the contrary (e.g. Matter of Boar & Beards [Oleg Cassini, Inc.], 30 NY2d 649 [1972]) are no longer good law.


text:
    In the Matter of the Claim of Marcita G. Childs, Appellant. Kaleida Health, Respondent; Commissioner of Labor, Respondent.
    Submitted October 17, 2011;
    decided December 15, 2011
    Reported below, 69 AD3d 1070.
   Motion for leave to appeal dismissed upon the ground that the order sought to be appealed from does not finally determine the proceeding within the meaning of the Constitution.


text:
    Frank Fusca, Respondent, v A & S Construction, LLC, Appellant. (And a Third-Party Action.)
    Submitted October 24, 2011;
    decided December 15, 2011
    Reported below, 84 AD3d 1155.
   Motion for leave to appeal dismissed upon the ground that the order sought to be appealed from does not finally determine the action within the meaning of the Constitution.


text:
    Galasso, Langione & Botter, LLP. et al., Respondents, v Thomas F. Liotti, Defendant and Third-Party Plaintiff-Appellant. Frederick K. Brewington, Third-Party Defendant-Respondent.
    Submitted October 17, 2011;
    decided December 15, 2011
    Reported below, 81 AD3d 884.
   Motion for reargument of motion for leave to appeal denied [see 17 NY3d 847 (2011)]. Motion for a stay dismissed as academic.


text:
    In the Matter of Rickey Lynch, Appellant, v William Condon, Respondent.
    Submitted November 7, 2011;
    decided December 15, 2011
    Reported below, 87 AD3d 644.
   On the Court’s own motion, appeal dismissed, without costs, upon the ground that the issues presented have become moot. Motion for leave to appeal dismissed upon the ground that the issues presented have become moot.


text:
    Javondi Pender, Appellant, v Lasalle Bus Service, Inc., Respondent.
    Submitted October 24, 2011;
    decided December 15, 2011
    Reported below, 2011 NY Slip Op 83123(U).
   Motion for leave to appeal dismissed upon the ground that the Court of Appeals does not have jurisdiction to entertain this motion for leave to appeal from the order of the Appellate Division entered in this proceeding commenced in the Civil Court of the City of New York (NY Const, art VI, § 3 [b] [7]; CPLR 5602 [a]). Motion for poor person relief dismissed as academic.


text:
    Randi Rhodes, Also Known as Randi Robertson, Appellant, v Steven Edward Herz et al., Respondents.
    Submitted October 17, 2011;
    decided December 15, 2011
    Reported below, 84 AD3d 1.
   Motion for leave to appeal dismissed upon the ground that the order sought to be appealed from does not finally determine the action within the meaning of the Constitution.


text:
    [962 NE2d 261, 938 NYS2d 838]
    The People of the State of New York, Respondent, v Frederick E. Walker, Appellant.
    Decided December 20, 2011
    APPEARANCES OF COUNSEL

      James S. Hinman, P.C., Rochester (James S. Hinman of counsel), for appellant.

      Michael C. Green, District Attorney, Rochester (Stephen X. O’Brien of counsel), for respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.11 of the Rules of the Court of Appeals (22 NYCRR 500.11), order modified and case remitted to Supreme Court, Monroe County, for further proceedings, and as so modified, affirmed. We conclude that on this record defendant satisfied his burden of showing that a reconstruction hearing is necessary to determine whether he was present during the Sandoval hearing. Upon remittal, if it is determined that defendant was not present during the Sandoval hearing, a new trial must be ordered; if it is determined that defendant was present, the judgment of conviction should be amended to reflect that result.

Concur: Chief Judge Lippman and Judges Cipajrick, Gbaffeo, Read, Smith and Jones. Taking no part: Judge Pigott.


author: Chief Judge Lippman (dissenting).

text:
    [962 NE2d 261, 938 NYS2d 839]
    The People of the State of New York, Respondent, v David Holland, Appellant.
    Argued November 16, 2011;
    decided December 20, 2011

      APPEARANCES OF COUNSEL

      Legal Aid Society, Criminal Appeals Bureau, New York City (Arthur H. Hopkirk, Justin Diamant and Steven Banks of counsel), for appellant.

      Cyrus R. Vance, Jr., District Attorney, New York City (William Mahoney, Alan Gadlin and Joseph Davis of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The appeal should be dismissed upon the ground that the reversal by the Appellate Division (74 AD3d 520 [1st Dept 2010]) was not on the law alone within the meaning of CPL 450.90 (2) (a).

Here, the Appellate Division’s reversal of Supreme Court’s order granting suppression, while termed “on the law,” was actually predicated upon a differing view concerning the issue of attenuation, which is a mixed question of law and fact. A reversal on a mixed question typically does not meet the requisites of CPL 450.90 (2) (a) (see People v Mayorga, 64 NY2d 864, 865 [1985] [dismissing an appeal from an Appellate Division order of reversal involving mixed question of whether “there has been an attenuating break in an interrogation”]; People v Lawrence, 74 NY2d 732 [1989]; People v Howard, 74 NY2d 943 [1989]; People v Hinton, 81 NY2d 867 [1993]).

Chief Judge Lippman (dissenting).

If the Appellate Division, in reversing the motion court’s grant of suppression, had performed an attenuation analysis and consequently concluded that defendant’s act of physically contacting a police officer was not in fact directly attributable and proportionately responsive to the preceding official illegality, I would agree that the appeal should be dismissed since it would then present an inquiry turning in essential part on factual findings by the Appellate Division unreviewable by this Court (see CPL 450.90 [2] [a]). The Appellate Division, however, decided the matter “on the law,” and while that is not from this Court’s perspective a binding characterization, it is accurately descriptive of the Court’s decision. The problem now presented—a purely legal one—is that while purporting to make a finding of attenuation, the Court eschewed the analysis upon which such a finding must rest.

The evidence adduced at the hearing upon defendant’s suppression motion showed that, upon observing defendant walking in the early morning in an area near a public housing project known for its high incidence of crime, Police Officer David Porras asked defendant to stop. Officer Porras inquired whether defendant lived in the project, and defendant replied that he did not. The officer then asked defendant for photo identification, which defendant provided. Officer Porras examined defendant’s identification and found it satisfactory; he acknowledged that his inquiry had at that point run its course. Nonetheless, he did not return defendant’s photo identification and allow him to go on his way. Rather, he retained the identification and stood by without interceding as one of his partners approached and repeated the inquiries he, Porras, had just completed. Defendant reportedly became agitated and, at the approach of yet a third police officer, either pushed or punched Officer Porras in what the officers understood as an attempt “to go.” A scuffle ensued in the aftermath of which defendant was arrested for assault and disorderly conduct, and then searched. Drugs were found on his person.

In granting defendant’s motion to suppress the drugs thus recovered, the motion court found that defendant had been illegally detained and that the illegality had not been attenuated by defendant’s attempt to get past the police officers “blocking [his] egress.” The court observed,

“[e]ven if there was a basis for initially requesting information from defendant . . . any such justification was exhausted after he answered Porr[a]s who was obligated to return the identification and allow him to leave. The continued detention was unlawful and the reaction of defendant proportionate to the circumstances. It does not attenuate the unlawful detention and render the contraband admissible.”

The Appellate Division, while disagreeing with the motion court’s conclusion that the primary official illegality had not been attenuated by defendant’s conduct, was assertedly disinterested with the nature and quality of the illegality or of the attenuating conduct. Indeed, the Court expressly found it unnecessary to decide whether there had been any official illegality (74 AD3d 520, 522 [1st Dept 2010]), since “[o]nce defendant punched Officer Porras, any allegedly unlawful conduct in stopping and questioning defendant was attenuated by his calculated, aggressive and wholly distinct conduct” (id. at 521 [emphasis added]). And, while the Appellate Division characterized the attenuating conduct as a “punch,” that characterization was ultimately unimportant to its analysis, since the Court found it “of no moment whether defendant punched or pushed Officer Porras, because . . . the police officers did not initiate or attempt to initiate physical contact with defendant” (id. at 522).

The dissenting Justices, by contrast, after a thorough review of the record facts to ascertain precisely what had transpired and the manner in which defendant’s alleged attenuative conduct was related to his immediately preceding detention, concluded:

“In view of the officers’ concession that defendant was trying to get away from them, the documentary evidence and Porras’s eventual admission at the hearing that defendant pushed him, the limited physical force used against Porras by defendant was an immediate response to his unjustified detention. It does not constitute an independent act sufficiently attenuated from the unlawful detention so as to dissipate the illegal taint associated with it (cf. Townes, 41 NY2d at 101-102), but was an immediate and direct consequence of that unlawful detention” (74 AD3d at 529).

Ordinarily, a finding of attenuation in the search and seizure context entails an analysis taking into account the specific nature of the illegal intrusion and the timing and quality of the subsequent, allegedly attenuating act or circumstance. Where, as in the present matter, it is claimed that the defendant’s act attenuated the primary illegality, “[t]he test to be applied is whether defendant’s action . . . was spontaneous and precipitated by the illegality or whether it was a calculated act not provoked by the unlawful police activity and thus attenuated from it” (People v Wilkerson, 64 NY2d 749, 750 [1984]).

Here, the Appellate Division simply concluded that any alleged illegality, no matter how extreme or provocative, must have been attenuated by defendant’s act of initiating physical contact with Officer Porras, even if that act consisted only of a push to get past the three officers illegally blocking his way. This was, in the end, not an attenuation analysis at all, but simply the announcement of an arbitrary rule that any physical contact with a police officer—no matter what its force or purpose—if not preceded by an attempt by the officer to contact the defendant, will be deemed distinct and unattributable to any precedent official illegality, no matter how provocative. Certainly, there is nothing in our cases that could be construed as permitting the substitution of such a rule for an attenuation analysis.

I do not say that the Appellate Division was bound to resolve the attenuation issue as the motion court had and the dissenting Justices would have, only that if it was to decide the question differently it had to perform an attenuation analysis—that is to say it had to make a conscientious effort to ascertain whether defendant’s allegedly attenuating act was or was not directly precipitated by and a proportionate response to his closely antecedent illegal detention. To do this, it would have been essential for the Court to make some finding as to the nature and quality of the official illegality and defendant’s following act. Inasmuch as the Court expressly found that such findings were either dispensable or irrelevant, and instead merely concluded that defendant’s initiation of contact was per se attenuative, whatever the nature of the contact or of any antecedent official provocation, I believe that the correct disposition of this appeal is to remit to the Appellate Division for a proper determination of the attenuation issue.

In instead pigeonholing this appeal as one involving a “mixed question,” the Court makes a choice that is not only unsound jurisdictionally, but erosive of this Court’s role in articulating the law governing police-civilian encounters. The doctrine of attenuation in the search and seizure context is of course nothing more than a closely limited exception to the general, dominant rule that police intrusions must be justified at their inception (see Terry v Ohio, 392 US 1, 19-20 [1968]; People v Cantor, 36 NY2d 106, 111 [1975]; People v Moore, 6 NY3d 496, 498 [2006]). If the exception is not to swallow the rule, care must be taken to assure that the doctrine is correctly employed. When courts with the factual jurisdiction to make attenuation findings employ facile analytic shortcuts operating to shield from judicial scrutiny illegal and possibly highly provocative police conduct, an issue of law is presented that is, I believe, this Court’s proper function to resolve. The alternative is to turn a blind eye to “tactics . . . [under which] any person might be approached, detained, intimidated, harassed, even provoked into a display of aggression and thereupon arrested, effectively eviscerating Fourth Amendment protections and ‘abandoning] the law-abiding citizen to the police officer’s whim or caprice’ (Cantor, 36 NY2d at 112)” (74 AD3d at 530 [Tom, J., dissenting]). This is not an exaggerated or purely academic concern in a jurisdiction where, as is now a matter of public record, hundreds of thousands of pedestrian stops are performed annually by the police, only a very small percentage of which actually result in the discovery of evidence of crime.

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

Appeal dismissed, in a memorandum.

       Pursuant to CPL 450.90 (2) (a), this Court may entertain an appeal from an order of an intermediate appellate court reversing an order of a criminal court only if it “determines that the intermediate appellate court’s determination of reversal . . . was on the law alone or upon the law and such facts which, but for the determination of law, would not have led to reversal.”

      . The officers’ memo books indicated that Porras was pushed and Porras himself testified to that effect. Another officer testified, at variance with his earlier written account, that defendant punched Porras.

      . The Court, as noted, explicitly did not make any finding as to whether there had been an illegal detention: “we need not resolve the issue of the legality of the police officers’ stopping and questioning defendant” (74 AD3d at 522).

      . Of course, if the Court had concluded that there was no illegal detention, there would have been no need to introduce the concept of attenuation at all.

      . As Judge Scheindlin recently noted in denying, in part, the municipal defendants’ motion to dismiss claims alleging racial bias in the New York City Police Department’s stop and frisk policies and practices, “it is clear that the policing policies that the City has implemented over the past decade and a half have led to a dramatic increase in the number of pedestrian stops, to the point of now reaching almost 600,000 a year” (Floyd v City of New York, 813 F Supp 2d 417, 422 [SD NY 2011] [internal quotation marks and footnote omitted]).


text:
    [963 NE2d 123, 939 NYS2d 746]
    Roni LLC et al., Respondents, v Rachel L. Arfa et al., Appellants, et al., Defendants.
    Argued November 15, 2011;
    decided December 20, 2011

      APPEARANCES OF COUNSEL

      Schlam Stone & Dolan, LLP, New York City (David J. Katz and Michael C. Marcus of counsel), for appellants.

      Balber Pickard Maldonado & Van Der Tuin, P.C., New York City (John Van Der Tuin and Jane Y. Ginns of counsel), for respondents.

      Eric T. Schneiderman, Attorney General, New York City (Richard Dearing of counsel), for Office of the Attorney General, amicus curiae.

      Larry E. Ribstein, of the Illinois bar, admitted pro hac vice, amicus curiae.
   OPINION OF THE COURT

Memorandum.

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

This action arises from a series of related business transactions in which a number of Israeli investors acquired membership interests in seven limited liability companies that purchased residential buildings in the Bronx and Harlem for renovation and resale. The promoter defendants organized the limited liability companies, located and managed the properties, and solicited the investors. Plaintiffs—the majority of the investors or their assignees—brought this action, alleging that the promoter defendants deliberately concealed that property sellers and mortgage brokers paid them commissions of up to 15% of the purchase prices of the properties and that these commissions inflated the purchase prices by millions of dollars. The complaint contains claims for an accounting, waste, breach of fiduciary duty, actual fraud and constructive fraud. The promoter defendants moved to dismiss the complaint insofar as asserted against them pursuant to CPLR 3211.

Supreme Court granted the motion to the extent of dismissing the causes of action for waste and actual fraud. It also permitted plaintiffs to replead their fraud claim. The Appellate Division affirmed (74 AD3d 442 [1st Dept 2010]) and granted the promoter defendants leave to appeal on a certified question.

The promoter defendants argue that the three claims at issue on this appeal—an accounting, breach of fiduciary duty and constructive fraud—must be dismissed because no fiduciary relationship existed between the promoter defendants and plaintiffs before the formation of the limited liability companies. On a CPLR 3211 motion to dismiss, however, we must give the complaint a liberal construction, accept the allegations as true and provide plaintiffs with the benefit of every favorable inference. Indeed, the question of “[w]hether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss” (EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). Applying this standard, we conclude that plaintiffs’ allegations of a fiduciary relationship survive the dismissal motion.

A fiduciary relationship arises “between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation” (id. [internal quotation marks and citation omitted]). Put differently, “[a] fiduciary relation exists when confidence is reposed on one side and there is resulting superiority and influence on the other” (AG Capital Funding Partners, L.P v State St. Bank & Trust Co., 11 NY3d 146, 158 [2008] [internal quotation marks and citation omitted]). Ascertaining the existence of a fiduciary relationship “inevitably requires a fact-specific inquiry” (Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553, 561 [2009]).

Here, plaintiffs assert that the promoter defendants planned the business venture, organized the limited liability companies, solicited their involvement and exercised control over the invested funds. We agree with plaintiffs that the promoters of a limited liability company are in the best position to disclose material facts to investors and can reveal those facts more efficiently than individual investors, who would otherwise incur expense investigating what the promoters already know. In addition, the complaint alleges that the promoter defendants represented to the foreign investors that they had “particular experience and expertise” in the New York real estate market. Although the promoter defendants describe plaintiffs as “sophisticated prospective investors,” the complaint paints a different picture, stating that they were “overseas investors who had little or limited knowledge of New York real estate or United States laws, customs or business practices with respect to real estate or investments.” Moreover, plaintiffs contend that the promoter defendants assumed a position of trust and confidence, in part, by “playing upon the cultural identities and friendship” of plaintiffs. Accepting the totality of these allegations to be true, as we must at this early stage of the litigation, the complaint adequately pleads a fiduciary relationship.

The promoter defendants’ alternative contention that plaintiffs’ accounting, breach of fiduciary duty and constructive fraud claims are preempted by the Martin Act is without merit (see Assured Guar. [UK] Ltd. v J.P. Morgan Inv. Mgt. Inc., 18 NY3d 341 [2011] [decided today]). Finally, we agree with the Appellate Division that the constructive fraud claim withstands the motion to dismiss because “plaintiffs sufficiently alleged damages by asserting that they suffered actual pecuniary loss in the amount of the secret commissions that inflated the purchase prices of the properties” (74 AD3d at 445).

Chief Judge Lippman and Judges Cipajrick, Gbaffeo, Read, Pigott and Jones concur in memorandum. Taking no part: Judge Smith.

Order affirmed, etc.

      . Certainly, there are differences between limited liability companies and traditional corporations, but the distinctions are not relevant to the allegations in this case: a potential exists regardless of corporate form for “conscienceless promoters [to] aceumulatef ] property at a low price under a well-devised scheme to unload it upon others at a high price” (Heckscher v Edenborn, 203 NY 210, 219 [1911]).

      . Based on the foregoing analysis, we need not decide the question of whether the promoter defendants’ status as organizers of the limited hability companies, standing alone, was sufficient to allege a fiduciary relationship.