author: Chief Judge Lippman.

text:
    [973 NE2d 735, 950 NYS2d 325]
    Oddo Asset Management, Appellant, v Barclays Bank PLC et al., Respondents, et al., Defendants.
    Argued May 30, 2012;
    decided June 27, 2012

      POINTS OF COUNSEL

      Grant & Eisenhofer P.A., New York City (Geoffrey C. Jarvis, Jay W. Eisenhofer, Deborah A. Elman and David M. Haendler of counsel), for appellant.
    I. The Appellate Division erred in finding, on a pre-answer motion, that the managers of the SIV-Lites did not owe a fiduciary duty to Oddo Asset Management. (Sergeants Benevolent Assn. Annuity Fund v Renck, 19 AD3d 107; Wiener v Lazard Freres & Co., 241 AD2d 114; Bank of Am. Corp. v Lemgruber, 385 F Supp 2d 200; Mandelblatt v Devon Stores, 132 AD2d 162; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11; Anonymous v CVS Corp., 188 Misc 2d 616; Bestolife Corp. v American Amicable Life, 5 AD3d 211; Frydman & Co. v Credit Suisse First Boston Corp., 272 AD2d 236; Bernstein v Kelso & Co., 231 AD2d 314; Bullmore v Ernst & Young Cayman Is., 45 AD3d 461.) II. The Appellate Division’s conclusion that no contract was breached is legally and factually flawed. (State St. Bank & Trust Co. v Inversiones Errazuriz Limitada, 374 F3d 158; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Murphy v American Home Prods. Corp., 58 NY2d 293; Richbell Info. Servs. v Jupiter Partners, 309 AD2d 288; Sorenson v Bridge Capital Corp., 52 AD3d 265, 12 NY3d 748; Pernet v Peabody Eng’g Corp., 20 AD2d 781; Dalton v Educational Testing Serv., 87 NY2d 384; Lama Holding Co. v Smith Barney, 88 NY2d 413; Marks v Smith, 65 AD3d 911; Frydman & Co. v Credit Suisse First Boston Corp., 272 AD2d 236.)

      Linklaters LLP, New York City (Lance Croffoot-Suede, Sterling P.A. Darling, Jr., and Katherine R. Ryan of counsel), for Barclays Bank PLC and another, respondents.
    I. Oddo Asset Management’s failure to plead breaches of its contracts with Golden Key Ltd. and Mainsail II Ltd. precludes its claims for tortious interference with contract. (Lama Holding Co. v Smith Barney, 88 NY2d 413; New York Univ. v Continental Ins. Co., 87 NY2d 308; Jack L. Inselman & Co. v FNB Fin. Co., 41 NY2d 1078; Rosen Assoc. Mgt. Corp. v Bruckner Plaza Assoc., 294 AD2d 556; Dalton v Educational Testing Serv., 87 NY2d 384; Amcan Holdings, Inc. v Canadian Imperial Bank of Commerce, 70 AD3d 423; Pernet v Peabody Eng’g Corp., 20 AD2d 781; Pramer S.C.A. v Abaplus Intl. Corp., 76 AD3d 89; Accurate Copy Serv. of Am., Inc. v Fisk Bldg. Assoc. L.L.C., 72 AD3d 456; Murphy v American Home Prods. Corp., 58 NY2d 293.) II. The Commercial Division’s use of the term “sophisticated” and its description of Oddo Asset Management as a creditor is not error. (Wachovia Sec., LLC v Joseph, 56 AD3d 269; Centro Empresarial Cempresa S.A. v América Móvil, S.A.B. de C.V., 76 AD3d 310, 17 NY3d 269; Arfa v Zamir, 76 AD3d 56, 17 NY3d 737; RNK Capital LLC v Natsource LLC, 76 AD3d 840; Ark Bryant Park Corp. v Bryant Park Restoration Corp., 285 AD2d 143.)

      Cahill Gordon & Reindel LLP, New York City (Dean Ringel, Floyd Abrams and Victor Suthammanont of counsel), for McGraw-Hill Companies, Inc., respondent.
    I. The Appellate Division correctly determined that plaintiff failed to state a cause of action for aiding and abetting a breach of a fiduciary duty. (Northeast Gen. Corp. v Wellington Adv., 82 NY2d 158; Meinhard v Salmon, 249 NY 458; Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553; Marmelstein v Kehillat New Hempstead: The Rav Aron Jofen Community Synagogue, 45 AD3d 33; United States v Chestman, 947 F2d 551; Dobroshi v Bank of Am., N.A., 65 AD3d 882; AJW Partners LLC v Itronics Inc., 68 AD3d 567; WIT Holding Corp. v Klein, 282 AD2d 527; Mandarin Trading Ltd. v Wildenstein, 16 NY3d 173; SNS Bank v Citibank, 7 AD3d 352.) II. Plaintiff failed to allege McGrawHill’s knowing participation or substantial assistance in any breach of fiduciary duty or that McGraw-Hill’s acts proximately caused plaintiffs damages. (Kaufman v Cohen, 307 AD2d 113; Bullmore v Ernst & Young Cayman Is., 45 AD3d 461; Roni LLC v Arfa, 15 NY3d 826; Global Mins. & Metals Corp. v Holme, 35 AD3d 93; Mazzaro de Abreu v Bank of Am. Corp., 525 F Supp 2d 381; Harlow v Fitzgerald, 457 US 800; Gall v Summit, Rovins & Feldesman, 222 AD2d 225.)
   OPINION OF THE COURT

Chief Judge Lippman.

Following the collapse of two investment vehicles, known as SIV-Lites, Oddo Asset Management (Oddo) commenced this action against Barclays Bank PLC, Barclays Capital Inc. (collectively, Barclays), and the McGraw-Hill Companies, Inc. (parent company of Standard & Poor’s) claiming aiding and abetting breach of fiduciary duty and tortious interference with contract. For the reasons that follow, we conclude that the collateral managers appointed to oversee the assets of the SIV-Lites did not owe a fiduciary duty to plaintiff, and plaintiff failed to state a cognizable claim for tortious interference with contract. We therefore affirm the Appellate Division order upholding the dismissal of the complaint.

L

Plaintiff Oddo Asset Management, a leading French asset management company with over 350 institutional clients and investments of €16.6 billion, purchased $30 million in Golden Key Ltd. (Golden Key) AAA-rated and AA-rated mezzanine notes from Barclays in 2005 and 2006 and $20 million in AAA-rated mezzanine notes in Mainsail II (Mainsail) from Barclays in July 2006. Golden Key and Mainsail were SIV-Lites, a type of structured investment vehicle that borrowed money and raised equity to purchase asset-backed securities. The SIV-Lites borrowed money by issuing commercial paper, mezzanine notes, and capital notes. Commercial paper (essentially short-term promissory notes) comprised about 90% of the funding for Golden Key and Mainsail and was senior in terms of priority of distributions. Commercial paper holders were paid a fixed rate of return and their entire principal was to be repaid upon maturity, in 90 days. When the commercial paper notes matured, the SIV-Lites were required to raise fresh funds in a process known as “rolling over” their commercial paper. The mezzanine notes had a four- or five-year term of maturity and also paid a set rate of return, and the principal was to be returned upon maturity. The capital notes had a later maturity date than the mezzanine notes and would be the first to absorb losses related to declines in the SIV-Lites’ asset value. The SIV-Lite business model was to generate a higher rate of return from its asset-backed securities, which were comprised primarily of residential mortgage-backed securities (RMBS) and commercial mortgage-backed securities (CMBS), than the interest the SIV-Lite had to pay the holders of the commercial paper, mezzanine notes, and capital notes. The profits of the SIV-Lites were split between the capital noteholders and the collateral managers.

Defendant Barclays arranged the creation of Golden Key and Mainsail by incorporating the SIV-Lites as limited liability entities in the Cayman Islands. Barclays also determined the size and leverage of the SIV-Lites and prepared the information memoranda describing the SIV-Lites and the notes to be issued. Barclays warehoused asset-backed securities for purchase and provided loans in the event of a liquidity shortage.

Barclays also selected the collateral managers of Golden Key and Mainsail. Nonparty Avendis Financial Services Limited (Avendis) and defendant Solent Capital (Jersey) Limited (Solent) were appointed as collateral managers to invest and manage the proceeds raised from the issuance of notes in Golden Key and Mainsail, respectively. The collateral managers were responsible for ensuring that the investment portfolio satisfied “Specific Investment Eligibility Criteria” and maintained a certain credit quality. For instance, instruments acquired by Golden Key were required to have a minimum public rating of at least AA- by Standard & Poor’s (S&P) at the time of acquisition. The collateral managers were also responsible for making trades, reinvesting principal proceeds from maturing assets, and maximizing recovery rates when defaults on the SIV-Lite’s asset pool occurred. In their management agreements, Solent and Avendis agreed to perform their responsibilities with “reasonable care, in good faith and in a manner generally consistent with . . . [the] standard of care and degree of skill . . . exercised by[ ] institutional managers of international standing.” The collateral managers sent weekly reports to the ratings agencies regarding the status of the investments. Periodic valuation reports for the SIV-Lites were sent by the administrator, QSR Management, to the noteholders.

S&P (owned by defendant the McGraw-Hill Companies) evaluated the risk of default for the issued notes and rated Golden Key and Mainsail’s “Tier 1” mezzanine notes AAA and “Tier 2” mezzanine notes AA. A security trustee, the Bank of New York, was also appointed to represent the interests of note-holders and was granted a security interest in all of Golden Key’s and Mainsail’s assets, securing the mezzanine notes.

According to Oddo, Avendis and Solent conspired with Bar-clays to transfer to Golden Key and Mainsail impaired sub-prime mortgage-backed securities at inflated prices. In July and August 2007, after obtaining the required noteholder consents and ratings confirmations from S&R Golden Key increased its size by purchasing $574 million in warehoused sub-prime mortgage-backed securities from Barclays at par, meaning at the price that Barclays paid for them. Upon transfer, Golden Key allegedly suffered an immediate loss of approximately $123 million, or 21% of the value transferred to Barclays. Likewise, Barclays sold $400 million in warehoused mortgage-backed securities to Mainsail in April 2007 and an additional $637 million in securities to Mainsail in July 2007. Mainsail purchased the securities at par, despite the fact that the securities had fallen significantly in value. The SIV-Lites were required to purchase at par according to their warehousing agreements with Barclays (see n 3, supra). Immediately after acquisition, Mainsail allegedly suffered a loss of $505 million. Oddo maintains that Bar-clays offloaded the sub-prime asset-backed securities onto the balance sheets of Golden Key and Mainsail in order to shift losses from Barclays to the SIV-Lites, knowing that the securities would plummet in value. Oddo claims that both Avendis and Solent acquiesced to the expansion because they did not want to jeopardize their relationships with Barclays. The collateral managers sought to be appointed as managers on future Barclays-arranged investment vehicles and were hoping to obtain a larger fee with an expanded investment portfolio, according to Oddo.

About 28 days after S&P had confirmed the AAA ratings of the mezzanine notes of both Golden Key and Mainsail in July 2007, S&P issued a report downgrading the ratings of both SIVLites by 17 notches, from AAA to CCC. Oddo alleges that S&P knew that Golden Key and Mainsail’s investment portfolios were at serious risk of downgrade, even prior to the acquisition of the warehoused securities from Barclays. Oddo claims that S&P abandoned its professional standards by confirming Golden Key and Mainsail’s AAA ratings prior to the expansion of the investment portfolios. S&P allegedly acted as it did because Barclays was an important repeat customer.

Because both Golden Key and Mainsail held assets that were worth significantly less than their liabilities, the SIV-Lites were unable to reborrow in the commercial paper market, which triggered mandatory acceleration events. The vehicles ultimately collapsed, and both Golden Key and Mainsail investors lost nearly all of their investments. Oddo allegedly lost a total of $43 million ($50 million minus the $7 million in notes that Barclays bought back).

In July 2008, Oddo commenced this action against Barclays, S&E] and Solent. Oddo asserts that Solent breached its fiduciary duty to the investors of Mainsail and Avendis breached its fiduciary duty to the investors of Golden Key, and that Barclays and S&P aided and abetted these breaches. Oddo claims Avendis and Solent conspired with Barclays to transfer the mortgage-backed securities to the SIV-Lites even though Barclays knew that the securities were toxic. S&P was allegedly complicit in the collateral managers’ breach of fiduciary duty by issuing favorable ratings for the various notes issued by Golden Key and Mainsail, despite knowing that they were at risk of a downgrade. Oddo also claims that Barclays tortiously interfered with Oddo’s contract with Golden Key and Mainsail.

Defendants moved to dismiss the complaint for lack of personal jurisdiction against Solent and for failure to state a cause of action, arguing that neither Avendis nor Solent owed a fiduciary duty to plaintiff under applicable law. Barclays argued that Oddo failed to state a claim for tortious interference because it did not allege an underlying breach of the mezzanine notes. Supreme Court dismissed the claims against Solent for lack of personal jurisdiction and also dismissed all claims against Barclays and S&P (36 Misc 3d 1205[A], 2010 NY Slip Op 52449[U] [2010]). Plaintiff appealed as to Barclays and S&f] and the Appellate Division affirmed, holding that “[t]he causes of action for aiding and abetting a breach of fiduciary duty fail[ed] to allege that the collateral managers of the [SIV-Lites] had any contact or relationship with plaintiff such as would give rise to an underlying fiduciary duty” (Oddo Asset Mgt. v Barclays Bank PLC, 84 AD3d 692, 693 [1st Dept 2011]). The Appellate Division further determined that plaintiff’s tortious interference claim failed because Oddo did not allege an actual breach of the underlying contract (id.). We granted plaintiffs motion for leave to appeal (17 NY3d 713 [2011]), and now affirm.

IL

In Roni LLC v Arfa (18 NY3d 846, 848 [2011]), we held that a “fiduciary relationship arises between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation” ([internal quotation marks omitted], quoting EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19 [2005]). A fiduciary relationship is “necessarily fact-specific” and is also “grounded in a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions” (EBC I, 5 NY3d at 19). While a contractual relationship is not required for a fiduciary relationship, “if [the parties] do not create their own relationship of higher trust, courts should not ordinarily transport them to the higher realm of relationship and fashion the stricter duty for them” (Northeast Gen. Corp. v Wellington Adv., 82 NY2d 158, 162 [1993]; see EBC I, 5 NY3d at 20 [same]).

Foremost, there is generally “no fiduciary obligation in a contractual arm’s length relationship between a debtor and a note-holding creditor” (see AJW Partners LLC v Itronics Inc., 68 AD3d 567, 568 [1st Dept 2009]; SNS Bank v Citibank, 7 AD3d 352, 354 [1st Dept 2004]). A debtor and creditor have no special relationship of confidence and trust (see Dobroshi v Bank of Am., N.A., 65 AD3d 882, 884 [1st Dept 2009], lv dismissed 14 NY3d 785 [2010]), and the relationship is generally controlled by contract. Oddo admits in the complaint that the mezzanine notes it held were a “form of debt.” While the mezzanine notes did have some equity-like features in that noteholders could vote to remove the collateral managers, there is no factual basis to elevate Oddo’s rights to those of a shareholder. Shareholders of corporations hold the rights to have their assets managed honestly and prudently for the shareholders’ benefit. However, Oddo did not own shares or a fractional interest in the two SIVLites (see Yuko Ito v Suzuki, 57 AD3d 205, 207-208 [1st Dept 2008]); it was essentially a lender. The holders of equity (also known as the capital noteholders) in Golden Key and Mainsail absorbed the first losses to the SIV-Lites and would share in the potential profits. On the other hand, Oddo, a mezzanine note-holder, received a fixed rate of return and was to have its principal returned upon maturity. Even though the nature of the SIV-Lites was unique, the facts alleged in the complaint are insufficient to accord Oddo a status equivalent to a shareholder of Golden Key and Mainsail. While the collateral managers may have owed fiduciary and contractual duties to the SIV-Lites, there is no factual basis to create fiduciary duties running from the managers to the mezzanine noteholders. It is the receivers for the SIV-Lites who can bring claims for breach of fiduciary duty and breach of the management agreements against entities such as Solent, Barclays, and S&R

There are additional reasons to conclude that the collateral managers did not owe a fiduciary duty to Oddo. Oddo had no contractual relationship with Avendis and Solent and no direct dealings with them. "While Oddo argues that it received monthly investment reports from Avendis and Solent, the complaint provides that the administrator, QSR Management Limited, was the entity that sent noteholders periodic valuation reports. The complaint never alleged any direct communications between plaintiff and the collateral managers, and consequently, there is insufficient factual basis to establish a relationship of higher trust between Oddo and Avendis and Solent.

Therefore, affording every favorable inference to plaintiff and taking the allegations of the complaint as true (see EBC I, 5 NY3d at 19), we hold that plaintiff failed to allege facts giving rise to a fiduciary duty owed to it, and therefore S&P and Bar-clays cannot be liable for aiding and abetting a breach of such fiduciary duty.

III.

Plaintiff also alleges that Barclays tortiously interfered with plaintiffs contracts with Golden Key and Mainsail. In order to make a claim for tortious interference, plaintiff must plead the existence of a valid contract between the plaintiff and the SIVLites, Barclays’ knowledge of that contract, and Barclays’ intentional procurement of Golden Key’s and Mainsail’s breach of the contract without justification, actual breach of the contract, and Oddo’s damages resulting from the breach (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 424 [1996]). Oddo claims that Golden Key and Mainsail breached their contractual obligations by “acquiring the warehoused securities . . . [which] devalued the investors’ security interest in [the SIV-Lites’] investment portfolio and damaged [the SIV-Lites’] ability to pay interest” on the mezzanine notes (complaint 1Í1Í182, 199).

However, Golden Key and Mainsail never breached their contractual obligations to Oddo when expanding the size of their investment portfolios and acquiring the additional securities. Barclays properly obtained the required noteholder consents to expand Golden Key. Barclays, Avendis, and Solent also obtained confirmations from S&P of the ratings for the commercial paper and mezzanine notes prior to the acquisition of the warehoused securities. The warehousing provision in the contracts provided that the SIV-Lites would pay the warehouser’s (Barclays’) purchase price for the securities, despite any fluctuations in the market price. The risk of a shift in the market price of the warehoused securities was included in the information memoranda and known to Oddo at the time it purchased the mezzanine notes. As such, the expansion of the SIV-Lites’ investment portfolio and the acquisition of the warehoused securities did not breach any express term in Oddo’s contracts with Golden Key and Mainsail.

Moreover, Oddo’s claim for inducing breach of an implied covenant of good faith and fair dealing also fails. The bad faith and unfair dealing alleged in the complaint is not that of the SIVLites, who were themselves victims of the alleged scheme, but of Barclays and their managers, with which Oddo had no contract. Since there was no underlying breach of contract, Oddo’s tortious interference claim against Barclays also fails.

IV

The present case demonstrates how the utility of SIV-Lites themselves was undermined by the collapse of the housing boom in 2007 and 2008, which precipitated the credit crisis that decimated global financial markets. Prior to the demise of Golden Key and Mainsail, investors, rating agencies, and the arranging banks all wrongly assumed that credit markets would not dry up, and that the markets would always supply liquidity and provide a constant stream of funding. In hindsight, it is apparent that a greater degree of vigilance was necessary from all concerned before soliciting funds for, committing funds to, and rating esoteric entities with little understood risks, such as the SIV-Lites—whose fate was dependent almost exclusively on sub-prime residential and commercial mortgage-backed securities. That being said, Oddo has nevertheless failed to state a claim for aiding and abetting breach of fiduciary duty and tortious interference with contract, although remedies may be available to the receivers for the SIV-Lites.

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

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

Order affirmed, with costs.

      . Oddo’s asset portfolio was €16.6 billion as of the end of 2006.

      . While structured investment vehicles (SIVs) invested in a variety of asset classes such as mortgages, credit cards, auto loans, and subordinated bank debt and had no termination date, SIV-Lites mainly invested in RMBS and had a limited duration. SIV-Lites also had defined reinvestment strategies and reduced funding costs, but were riskier because they had large asset concentrations in a particular class (O’Leary, The Seductive Qualities of SIVs, 1 Am Securitization J [No. 2] 22, 24-26 [2007]).

      . SIV-Lites entered into warehousing transactions because, prior to issuing their notes, they did not have the capital necessary to purchase investments to generate returns used to make interest payments to the noteholders. Golden Key and Mainsail entered into credit agreements with Barclays, and Barclays agreed to purchase specific asset-backed securities and hold them for eventual sale or transfer to Golden Key or Mainsail, once they sold their notes. The warehousing provision of the information memoranda provided,
      “the Warehousing Party [Barclays] has agreed to acquire specified Investments for the Issuer [Golden Key and Mainsail] ... and hold them for purchase by, or transfer to, the Issuer. The Issuer will . . . purchase . . . the Warehousing Investments; provided, that the Issuer will not purchase or take delivery of any Warehousing Investment that at the time of purchase or delivery by it is not an Eligible Investment.”
      The SIV-Lites agreed to pay Barclays’ purchase price for the warehoused investments.

      . Unlike traditionally supported asset-backed commercial paper conduits, SIVs and SIV-Lites had limited liquidity support. They did not have access to full liquidity support from a highly rated financial institution, and their liquidity was totally dependent on their continued ability to issue new notes and on the market value of their assets (see Borgman, Prudent Investing? The Credit Crisis of August 2007, Mainsail II SIV-Lite, and the State Cash Investment Pool, Amfiteatru Econ J, Special No. 3, at 645, 652 [2009]).

      . A rating of AAA denotes high credit quality and is the same rating as those typically assigned to bonds backed by the full faith and credit of the United States Government, such as treasury bills.

      . The terms of Golden Key’s information memorandum provided that if the market value of Golden Key’s investment portfolio declined below 92% of the value of its total outstanding obligations, a mandatory acceleration event, or wind-down event, would occur. Golden Key’s debt obligations would accelerate, and all responsibility for managing investments would be transferred from Avendis to the trustee, the Bank of New York. Golden Key would be placed in a “frozen” state, and a receiver would be appointed to pay creditors in order of seniority from the entity’s remaining assets. Mainsail had similar provisions to guard against the structure taking on serious losses. The SIVLites had to pass a series of tests (e.g., capital wind-down test, commercial paper coverage test, leverage tests, market value coverage test) each business day in order to avoid a wind-down event. If interest was not paid on the commercial paper and mezzanine notes each month, that would constitute a wind-down event.
      The information memoranda also provided that interest payments “will be payable solely from, and to the extent of, the available proceeds” from the asset-backed securities and from the proceeds of additional offered notes. The information memoranda further advised noteholders that they should be aware of the risks involved in investing in leveraged asset-backed securities and that the securities may be subordinate in right of payment to other securities, despite being highly rated by S&E

      . Oddo never consented to the proposed expansion of Golden Key and even offered to sell its mezzanine notes to Barclays. Barclays agreed to purchase $7 million in AAA-rated mezzanine notes from Oddo. With consent from a sufficient number of noteholders, the increase in the size of Golden Key was approved.

      . S&P was asked to give its opinion on the creditworthiness of the SIVLites in light of the proposed increase in size of the SIV-Lites’ assets and liabilities. S&P confirmed the AAA ratings for the mezzanine notes of both Golden Key and Mainsail in April 2007 and July 2007. S&P was not asked to perform a credit analysis of the specific investment assets to be acquired by the vehicles.

        (n. cont’d)

      . In November 2007, Avendis ceased all operations and went into liquidation.

      . S&P is not a defendant on the tortious interference with contract claim.

      . Oddo’s purchases of the mezzanine notes was documented by a contract with the SIV-Lites, though Oddo had no contractual relationships with collateral managers, Avendis and Solent. The notes and corresponding offering documents explicitly stated that “in connection with the purchase of the mezzanine notes,” the collateral manager was not “acting as a fiduciary or financial or investment adviser for the holder.”

      . Additionally, Oddo was explicitly warned in the information memoranda that it could lose its principal and interest payments if the underlying investments (i.e., the mortgage-backed securities) failed and the entities became insolvent. The terms of the mezzanine notes also notified Oddo that, following a wind-down event, Oddo would only receive its principal and interest payments after Golden Key and Mainsail satisfied their obligations to commercial paper holders.

      . Insofar as there were contractual duties between Avendis/Solent and the SIV-Lites, plaintiff can obtain no benefit because the management agreements disclaimed any implied third-party beneficiary status.

      . See Davies and Sakoui, Sigma Collapse Marks End of SIV Era, Financial Times, Oct. 1, 2008.

      . See Jickling, Averting Financial Crisis, Congressional Research Service Report for Congress, at CRS-5 (Mar. 21, 2008).


source: Caselaw Access Project

author: Graffeo, J. Smith, J. (concurring).

license: Public Domain

text:
    [973 NE2d 730, 950 NYS2d 320]
    N.J.R. Associates, a New York Limited Partnership, Appellant, v Nicole Tausend, a Limited Partner of N.J.R. Associates, Respondent.
    Argued May 29, 2012;
    decided June 27, 2012

      POINTS OF COUNSEL

      Wilk Auslander LLP, New York City (Alan D. Zuckerbrod and Eric B. LaMons of counsel), for appellant.
    I. The First Department’s decision violates CPLR 7502 (b) and related case law which provides that any statute of limitations defense to arbitral claims is to be determined by the courts, not the arbitrators. (Morfopoulos v Lundquist, 191 AD2d 197; Matter of Carranza v Prinz, 240 AD2d 405; Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193; Matter of County of Rockland [Primiano Constr. Co.], 51 NY2d 1; Matter of Volpe v Volpe, 16 AD3d 1176; Matter of County of Nassau v Civil Serv. Empls. Assn., Inc., 14 AD3d 509; Morillo v Shearson Hayden Stone, 159 AD2d 1012; Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669; Matter of Avondale Mills [Majestic Carpet Mills, Div. of Celotex Corp.], 60 AD2d 542; Matter of Schwarzler v Garage Empls. Union Local No. 272, I.B.T., 52 AD2d 545.) II. Appellant’s counterclaims sounding in fraud are barred by collateral estoppel and the statute of limitations. (D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659; Matter of Neville v Martin, 38 AD3d 386; Da Silva v Musso, 76 NY2d 436; Roslyn Union Free School Dist. v Barkan, 16 NY3d 643; Fava v Kaufman, 124 AD2d 42; Vastola v Maer, 39 NY2d 1019.)

      Ingram Yuzek Gainen Carroll & Bertolotti, LLP, New York City (John G. Nicolich of counsel), for respondent.
    I. Nicole Tausend seeks to void the N.J.R. Associates (NJR) partnership agreement because Ronald Tausend fraudulently induced Nicole to become a partner of NJR. (AG Capital Funding Partners, L.P v State St. Bank & Trust Co., 11 NY3d 146; Sergeants Benevolent Assn. Annuity Fund v Renck, 19 AD3d 107; Wiener v Lazard Freres & Co., 241 AD2d 114; Meinhard v Salmon, 249 NY 458; Birnbaum v Birnbaum, 73 NY2d 461; Riviera Congress Assoc. v Yassky, 18 NY2d 540; Tobias v First City Natl. Bank & Trust Co., 709 F Supp 1266; R. C. Gluck & Co. v Tankel, 12 AD2d 339, 24 Misc 2d 841; Fraw Realty Co. v Natanson, 261 NY 396; Wood v Rabe, 96 NY 414.) II. The Appellate Division properly ruled that N.J.R. Associates may not seek to stay arbitration of Nicole Tausend’s counterclaims based on the statute of limitations. (Morfopoulos v Lundquist, 191 AD2d 197; Long Is./Conn. Limousine Group v Airlimo Express, 231 AD2d 610; Allied-Bruce Terminix Cos. v Dobson, 513 US 265; Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247; Matter of Lester Schwab Katz & Dwyer v Yukevich, 167 Misc 2d 1004; Masthead MAC Drilling Corp. v Fleck, 549 F Supp 854; New Castle County v United States Fire Ins. Co., 728 F Supp 318; Matter of Laszlo N. Tauber & Assoc. I v American Mgt. Assn., 304 AD2d 413; Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193; Matter of Edward D. Jones & Co. v American Stock Exch., LLC, 22 AD3d 319.) III. Nicole Tausend’s counterclaims are not barred by collateral estoppel. (Merrill Lynch, Pierce, Fenner & Smith v Benjamin, 1 AD3d 39; Matter of Falzone [New York Cent. Mut. Fire Ins. Co.], 15 NY3d 530; John Hancock Mut. Life Ins. Co. v Olick, 151 F3d 132; Miller v Runyon, 77 F3d 189; Sherrill v Grayco Bldrs., 64 NY2d 261; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65; Tydings v Greenfield, Stein & Senior, LLP, 11 NY3d 195; Gelb v Royal Globe Ins. Co., 798 F2d 38; D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659; Buechel v Bain, 97 NY2d 295.) IV Nicole Tausend’s counterclaims are not barred by the statute of limitations. (Matter of Paver & Wildfoerster [Catholic High School Assn.], 38 NY2d 669; Greene v Greene, 56 NY2d 86; Transport Workers Union of Am. Local 100 AFL-CIO v Schwartz, 17 AD3d 218; Westchester Religious Inst. v Kamerman, 262 AD2d 131; Matter of Barabash, 31 NY2d 76; St. John’s Univ., N.Y. v Bolton, 757 F Supp 2d 144; Golden Pac. Bancorp v Federal Deposit Ins. Corp., 273 F3d 509; Erbe v Lincoln Rochester Trust Co., 3 NY2d 321; Trepuk v Frank, 44 NY2d 723; Saphir Intl., SA v UBS PaineWebber Inc., 25 AD3d 315.)
   OPINION OF THE COURT

Graffeo, J.

We are asked in this case to determine what is the appropriate forum to resolve a statute of limitations challenge to counterclaims interposed in an arbitration proceeding—the arbitrator or a court. Based on the particular facts presented, we hold that the timeliness question is to be decided by the arbitrator.

I

Ronald Tausend and his two children, Nicole and Jeffrey Tausend, were the beneficiaries of a trust that was established by Ronald’s mother. Ronald was entitled to most of the trust’s income during his lifetime, with the balance of income reserved for his children. Nicole and Jeffrey were to begin receiving principal at the age of 25 and, upon their father’s death, the remaining principal would be distributed to them.

The trust owned two New York City buildings referred to as the “East End properties.” In 1985, when Nicole was 19 years old, her father formed the N.J.R. Associates partnership (NJR) for the purpose of acquiring the East End properties. Ronald held a 60% stake in the partnership; Nicole and Jeffrey each received a 20% share. The partnership agreement included an arbitration clause as well as a New York choice of law provision.

The bank that served as trustee obtained an appraisal valuing the two properties at $1.8 million. However, that figure did not include the value of air rights because the appraiser believed that they had no intrinsic worth. NJR subsequently purchased the properties from the trust for $1.9 million. Later that day, NJR sold the air rights for one of the buildings for $1.75 million. Approximately two decades later, NJR sold its remaining interest in that property for $10.25 million. The partnership also converted the other building into a condominium and sold a number of units.

During this time period, Nicole received monetary distributions from both the trust and NJR. NJR also provided her with the use of an apartment in one of the East End buildings. In 2005, Ronald surrendered his interest in the trust and the remaining principal was distributed to Nicole and Jeffrey.

Three years later, Nicole’s financial advisor asked NJR for information pertaining to the sale of the East End property but Ronald allegedly spurned that request. Nicole hired a law firm to represent her interests and its overtures were similarly rejected.

Nicole then commenced a CPLR article 78 proceeding against NJR and her father in order to obtain access to partnership documents and an accounting of its finances. In response, NJR issued a demand for arbitration, causing Nicole to file a petition to stay arbitration. Supreme Court denied the stay and ordered the parties to arbitration, and the Appellate Division affirmed (67 AD3d 441 [1st Dept 2009]).

Nicole appeared in the arbitration and asserted several counterclaims, which lead to NJR’s commencement of this court proceeding seeking to stay arbitration of the counterclaims on the basis of the expiration of the statute of limitations. Nicole moved to dismiss the proceeding, asserting that the timeliness challenge should be raised before the arbitrator. Supreme Court granted the petition and stayed arbitration of the counterclaims (2010 NY Slip Op 32936[U] [2010]). The Appellate Division modified by dismissing NJR’s petition to stay arbitration of the counterclaims, reasoning that CPLR 7503 (b) precluded the partnership from obtaining a stay because it had initiated and participated in the arbitration (83 AD3d 596 [1st Dept 2011]).

We granted leave to appeal (17 NY3d 848 [2011]) and now affirm.

II

NJR maintains that it is not prohibited from requesting that arbitration of the counterclaims be stayed under CPLR 7503 because its decision to arbitrate did not waive its right to challenge the timeliness of the counterclaims in court. Nicole contends that the initiator of arbitration is statutorily barred from requesting judicial review of a counterclaim and must instead submit all matters to the arbitrator. Nicole alternatively argues that the language of the choice of law clause in the partnership agreement was insufficient to invoke the New York rule that a statutory timeliness issue may be subject to judicial determination and that an arbitrator is therefore required under federal law.

The Federal Arbitration Act (9 USC § 1 et seq. [FAA]) applies to any arbitration provision in a contract that affects interstate commerce (see Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247, 252 [2005]). Under the federal act, resolution of a statute of limitations defense is presumptively reserved to the arbitrator, not a court (see id.). New York law, in contrast, allows a threshold issue of timeliness to be asserted in court (see CPLR 7502 [b]; 7503 [a]). A contract may be governed by the FAA yet subject to the New York rule if the agreement between the parties so provides. We have explained that a contract specifying that “New York law shall govern both ‘the agreement and its enforcement^ ]’ adopts” the New York rule that threshold statute of limitations issues are resolved by the courts and not arbitrators (Diamond Waterproofing, 4 NY3d at 253, quoting Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193, 202 [1995], cert denied sub nom. Manhard v Merrill Lynch, Pierce, Fenner & Smith, Inc., 516 US 811 [1995]).

It is unnecessary for us to decide whether the contract at issue is subject to the FAA or New York law because under either analysis, the proper forum is arbitration. Assuming that the partnership agreement affects interstate commerce and is governed by the FAA, this document does not include the critical “enforcement” language identified in Diamond Waterproofing—it states that “This Agreement shall be governed by, and construed in accordance with, the laws and decisions of the State of New York.” Since the agreement fails to unequivocally invoke the New York standard, the timeliness question must be resolved by an arbitrator under FAA principles.

The outcome is the same under New York law. A statute of limitations defense may be raised in state court by “a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration” (CPLR 7503 [b]; see also CPLR 7502 [b]). In light of the procedural history of this case, CPLR 7503 (b) prevents NJR from asking a court to dismiss Nicole’s counterclaims due to expiration of the statute of limitations. NJR not only initiated arbitration, it also successfully defended against Nicole’s petition to stay arbitration in court, received an application to compel arbitration in connection with Nicole’s counterclaims and sought a court order to prevent the counterclaims from being considered by the arbitrator. In our view, this was enough to constitute “participation” within the meaning of CPLR 7503 (b). It is also inconsistent for NJR to assert that Nicole’s counterclaims are not arbitrable—a party cannot compel arbitration of its own causes of action, prevent its adversary from obtaining judicial relief and then ask a court to block the adversary’s counterclaims from being arbitrated by raising a statute of limitations defense (see generally Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR 7503:2, at 456 [arbitration should proceed “(i)f there is at least one arbitrable issue” in a case]). Hence, since NJR initiated and participated in the arbitration of issues stemming from the dispute, its timeliness challenge to the counterclaims must be decided by an arbitrator.

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

Smith, J. (concurring).

Unlike the majority, I find it necessary to decide whether the contract at issue here is governed by the Federal Arbitration Act (FAA) or by New York law. I conclude that the FAA governs, and that the result the majority reaches is therefore correct.

I

I agree with the majority that, for the reasons it explains, under federal law the statute of limitations issue is for the arbitrator. But under state law, “statutory time limitations questions . . . are for the courts, not the arbitrators” (Matter of Smith Barney, Harris Upham & Co. v Luckie, 85 NY2d 193, 202 [1995] [emphasis omitted]). CPLR 7502 (b) says:

“If, at the time that a demand for arbitration was made or a notice of intention to arbitrate was served, the claim sought to be arbitrated would have been barred by limitation of time had it been asserted in a court of the state, a party may assert the limitation as a bar to the arbitration on an application to the court as provided in section 7503 . . . .”

CPLR 7503 (b) permits “a party who has not participated in the arbitration and who has not made or been served with an application to compel arbitration” to apply for a stay of arbitration “on the ground . . . that the claim sought to be arbitrated is barred by limitation.” The majority holds that NJR may not proceed under this statute because it “participated in the arbitration.” I do not agree.

It is true, of course, that NJR participated in, and indeed initiated, its own arbitration against Nicole Tausend. It did not, however, participate in the arbitration of Nicole’s counterclaims. On the contrary, it made a timely application to prevent those claims from being arbitrated. I see no reason why a party against whom an arbitration counterclaim is brought should be denied the right to seek relief in court that it would have if the counterclaim were an independent arbitration proceeding. Thus, NJR should not be held to have “participated in the arbitration” within the meaning of CPLR 7503 (b).

The majority says that

“NJR not only initiated arbitration, it also successfully defended against Nicole’s petition to stay arbitration in court, received an application to compel arbitration in connection with Nicole’s counterclaims and sought a court order to prevent the counterclaims from being considered by the arbitrator” (majority op at 602).

But if NJR’s initiation of the arbitration is not enough—as it should not be—to deprive it of the right to assert in court its statute of limitations defense to the counterclaims, the other activities mentioned by the majority should not change the result. Any party that initiates an arbitration can be expected, if necessary, to defend against a petition to stay; and to say that NJR received an application to compel and sought a court order to prevent the counterclaims from being considered is to say only that arbitration counterclaims were brought against it, and that it went to court to assert that these claims were barred by limitation of time. Nor is NJR guilty of inconsistency, as the majority asserts. The majority says that a party “cannot compel arbitration of its own causes of action . . . and then ask a court to block the adversary’s counterclaims from being arbitrated by raising a statute of limitations defense” (id.). But why not, if the party’s own claims are not time-barred and its adversary’s are?

II

Thus for me, this case turns on whether the governing rule is supplied by the FAA or by New York law. The FAA governs if the contract containing the arbitration clause—the NJR partnership agreement—is “a contract evidencing a transaction involving commerce” within the meaning of FAA § 2 (9 USC § 2), where “commerce” means (as relevant here) “commerce among the several States or with foreign nations” (9 USC § 1). In light of the broad reading that the United States Supreme Court has given to these terms, it is clear to me that the FAA applies to this contract.

In Allied-Bruce Terminix Cos. v Dobson (513 US 265, 268 [1995]), the Supreme Court held that section 2 of the FAA should be read “broadly, extending the Act’s reach to the limits of Congress’ Commerce Clause power.” The words “involving commerce” were held to have the same meaning as “affecting commerce”; “the word ‘involving,’ like ‘affecting,’ signals an intent to exercise Congress’ Commerce power to the full” (id. at 277). The Court also concluded that the statutory word “evidencing” means “only that the transaction (that the contract ‘evidences’) must turn out, in fact, to have involved interstate commerce” (id.). In short, the FAA applies here unless the transaction reflected by the partnership agreement, as that transaction was in fact implemented, is beyond Congress’s power to regulate under the Commerce Clause.

Whatever might be said about the power of Congress to require the purchase of health insurance or broccoli, I see no basis under the current state of the law for an argument that the transaction in this case was beyond Congress’s reach. Indeed, the transaction, as it has turned out, is both an interstate and international one: The record shows that the three partners of NJR—Ronald, Nicole and Jeffrey Tausend—are residents of New York, Italy and California respectively. The purpose of the transaction was to acquire Manhattan residential properties for $1.9 million. The properties were acquired, and the transaction was financed by Bankers Trust Company. It is unimaginable that, under modern precedents, such a transaction could be found to have no effect on interstate or foreign commerce (see Wickard v Filburn, 317 US 111 [1942]; Gonzales v Raich, 545 US 1 [2005]; Allied-Bruce, 513 US at 282; Matter of Diamond Waterproofing Sys., Inc. v 55 Liberty Owners Corp., 4 NY3d 247, 252-253 [2005]).

Because this is an FAA transaction, the majority is correct in deciding that the statute of limitations question must be decided in arbitration. The majority’s discussion of New York law is not only mistaken, but also unnecessary.

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

Order affirmed, with costs.

      . An air right is the ability “to use all or a portion of the airspace above real property” for future development (Black’s Law Dictionary 82 [9th ed]).

      . NJR’s remaining contentions are meritless.

       Strictly speaking, the majority is incorrect to say that NJR “received an application” by Nicole “to compel arbitration” of the counterclaims. Nicole moved only to dismiss NJR’s petition for a stay. If she had made a motion to compel arbitration, the court would have been required by CPLR 7503 (a) to decide whether her claims were time-barred.


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

text:
    [973 NE2d 697, 950 NYS2d 287]
    The People of the State of New York, Respondent, v Kevin Chestnut, Appellant.
    Argued May 3, 2012;
    decided June 7, 2012

      POINTS OF COUNSEL

      Appellate Advocates, New York City (William G. Kastin and Lynn W.L. Fahey of counsel), for appellant.
    In this one-witness identification case, the conceded misjoinder of appellant’s robbery charge with his codefendant’s unrelated drug and resisting arrest counts was not harmless error when it resulted in the admission of otherwise admissible and inflammatory evidence amounting to nearly one half of the trial testimony. (People v Castro-Restrepo, 169 AD2d 454; People v Mahboubian, 74 NY2d 174; Wilson v Sirmons, 536 F3d 1064; United States v Francis, 131 F3d 1452; United States v Santoni, 585 F2d 667; People v

      Gutkaiss, 206 AD2d 628; People v Minor, 49 AD2d 828; United States v Turoff, 853 F2d 1037; People v Pepin, 6 AD2d 992; People v Jorge, 172 Misc 2d 795.)

      Richard A. Brown, District Attorney, Kew Gardens (Jennifer Hagan and John M. Castellano of counsel), for respondent.
    Defendant’s claim that his case was improperly joined with codefendant Hall’s case is unpreserved for appellate review. Any error in the trial court’s denial of defendant’s motion for severance was, in any event, harmless. (People v Person, 8 NY3d 973; People v Graves, 85 NY2d 1024; People v Garcia, 83 NY2d 817; People v Stephens, 84 NY2d 990; People v Kello, 96 NY2d 740; People v Liccione, 50 NY2d 850; People v Wells, 15 NY3d 927; Zafiro v United States, 506 US 534; United States v Lane, 474 US 438; People v Crimmins, 36 NY2d 230.)
   OPINION OF THE COURT

Jones, J.

The issue presented is whether Supreme Court’s error in denying defendant’s requests for a severance based on the improper joinder of certain counts relating only to codefendant (see GPL 200.40 [1]) is harmless. We hold that Supreme Court’s conceded error is not.

On November 6, 2005, in broad daylight, two assailants robbed the complainant at gunpoint as he was loading packages into his car on a street in Queens. Jewelry, cash, a cell phone, two fur coats and an expensive bag were forcibly stolen from the complainant. By Queens County indictment No. 658/2006, defendant and his codefendant were charged, on an acting-in-concert theory, with first- and second-degree robbery based solely on the complainant’s identification. The same indictment also separately charged only the codefendant with four drug offenses and resisting arrest stemming from his arrest at his mother’s home on January 16, 2006. Although the drug counts and the resisting arrest count had no connection to defendant or the November 6, 2005 incident, defendant, who was arrested in December 2005, and his codefendant were tried together, before a jury, on the single indictment.

Defendant’s counsel, at numerous points during the proceedings, sought to sever the joint trial or otherwise advise the court of the impropriety of a joint trial in this case. For example, he:

(1) noted, in defendant’s pretrial omnibus motion, that defendant’s codefendant had been “indicted for a number of drug related offense[s] which by necessity will create substantial prejudice which will spill over and infect [defendant]”;
(2) stated, in support of defendant’s motion to sever, that “joint trials can be prejudicial when one defendant is not being accused of the same crimes as his co-defendant” and that defendant “should not be placed in a position where spillover testimony can adversely affect jury deliberations” (citing Zafiro v United States, 506 US 534, 539 [1993]);
(3) argued, during voir dire (about one week before trial), that defendant and his codefendant should not be tried jointly;
(4) stated, on the record just prior to jury selection, that defendant’s codefendant “is charged with drugs in this case. My client is not. I think I have a Herculean task [in] preventing the jury from mixing that mash together”;
(5) explained, following the trial court’s opening remarks to the jury pool, “Your Honor, during the course of the trial I am anticipating that the People by virtue of the posture of this indictment are about to be offering proof of [defendant’s codefendant] being involved in narcotics. . . . It’s my intention that each and every time . . . the prosecutor attempts to do that, I am going to be objecting to it, Judge.”
At this time, counsel further argued that a severance was “in order” because the drug evidence against defendant’s codefendant “will enure to the total detriment of [defendant] who is not charged in any way with any narcotics”;
(6) noted, in response to the trial court’s statement that it had instructed the jury pool to consider the charges separately, that such an instruction was “insufficient to cure the prejudicial effect” of a joint trial, and that the People were “making a grave mistake” by pursuing such a trial;
(7) objected to that portion of the prosecutor’s opening statement which referred to the warrant officers and the drug allegations because they did not pertain to defendant. At this point in the proceedings, the trial court indicated that it understood counsel’s objection and that counsel did not have to keep objecting;
(8) renewed his motion for severance based on the prosecutor’s opening statement, arguing that the prosecutor exposed the jury to “excessive prejudicial information,” and that defendant, who was not charged with any drug offenses, could “no longer get a fair hearing”; and
(9) objected to the drug-related testimony of police officers and other witnesses, and renewed his severance motion when one of the officers testified.

Although defendant’s counsel made numerous requests for a severance, the People never took a position on any of defendant’s applications; further, Supreme Court denied all of defendant’s requests for severance without explanation.

Defendant and his codefendant were convicted, upon a jury verdict, of first-degree robbery. In addition, defendant’s codefendant was convicted of three drug counts and resisting arrest. Defendant was sentenced to 12 years; his codefendant was sentenced to 25 years to life.

On appeal, defendant argued that the joinder of his robbery charges with the drug and resisting arrest charges against his codefendant violated CPL 200.40 (1), which provides that defendants may be jointly charged in a single indictment if (a) “all such defendants are jointly charged with every offense”; (b) “all the offenses charged are based upon a common scheme or plan”; (c) “all the offenses charged are based upon the same criminal transaction”; or (d) under certain circumstances where the indictment includes a count of enterprise corruption. The Appellate Division affirmed Supreme Court’s judgment, holding:

“As the People correctly concede, the codefendant should have been tried separately pursuant to CPL 200.40 (1) as to the drug counts and resisting arrest count against him, as those counts in no way related to the defendant. Although the Supreme Court erred in denying the defendant’s motion to sever the unrelated counts applicable only to the codefendant, the error was harmless” (81 AD3d 661 [2d Dept 2011] [citations omitted]).

A Judge of this Court granted defendant leave to appeal (17 NY3d 814 [2011]), and we now reverse.

The Appellate Division concluded, and the parties agree, that Supreme Court erred in denying defendant’s motion to sever the unrelated counts applicable only to his codefendant (see CPL 200.40 [1]). This error is clear because the Queens County indictment which charged defendant and his codefendant violated section 200.40 (l)’s direction concerning when defendants may be jointly charged in a single indictment; in other words, the instant joint trial was prohibited under CPL 200.40 (l). Thus, the question before us is whether this nonconstitutional error is harmless.

The harmless error doctrine is applicable only if: (1) the quantum and nature of the evidence against the defendant must be great enough to excise the error, and (2) the causal effect that the error may nevertheless have had on the jury must be overcome (see People v Crimmins, 36 NY2d 230, 240 [1975]). That is, it must be established that the evidence against the defendant is overwhelming, such that it is likely that the trial error did not infect the jury’s finding (see id. at 240-242). Stated differently, an error may be found to be harmless only where proof of guilt without reference to the error is overwhelming.

Contrary to the People’s contention, the evidence in this case is far from overwhelming. This was a one-witness identification case where the sole identifying witness was the complainant (i.e., only the complainant identified defendant as a perpetrator). There was no corroborating evidence. No physical evidence linked defendant to the robbery and he made no inculpatory statements. To establish that the evidence of defendant’s guilt was overwhelming in this case, the reliability of the complainant’s identification of defendant cannot be in question. Because there was reason to doubt the reliability of the complainant’s identification of defendant in the first instance, we reject the People’s contention that the evidence was overwhelming in establishing defendant’s guilt.

Indeed, the complainant’s description of the second assailant (alleged to be defendant) did not fit defendant. The complainant, who is five feet eight inches, said the second assailant was his height; defendant is 5 feet 11 inches. Further, although the crime occurred in broad daylight, the complainant did not notice certain physical features of defendant (e.g., tattoos on his hands), even though he claimed he looked at that assailant’s hands, which were six to seven inches away, “very closely” as he removed the complainant’s jewelry, but he never reported seeing tattoos on those hands.

The complainant also gave only the most general descriptions of his assailants to the police (i.e., a five feet seven inch black man of average build and a lighter-skinned five feet eight inch man). These vague descriptions cast doubt on the accuracy of bis subsequent identification, especially because the complainant testified that he was in close proximity to the assailant, alleged to be defendant, and that he looked at him for “at least a minute.”

In addition, the complainant was tentative and uncertain in bis initial identification of defendant. The complainant failed to definitively identify defendant’s photograph two hours after the robbery, instead asking to have it enlarged and saying it “look[ed] like” the man; a few weeks later the complainant could only say that defendant was “possibly” or “look[ed] like” the robber; the complainant only became “positive” in his identification of defendant about five weeks after the crime.

We further conclude that the second prong of the harmless error test was not met because here there is a great risk that Supreme Court’s error infected the jury’s finding. The improper joinder (of defendant and his codefendant) Supreme Court allowed, in clear violation of CPL 200.40 (1), necessarily prejudiced defendant. Moreover, the prejudice to defendant was exacerbated by what flowed from the trial court’s decision not to grant a severance.

The jury not only learned that four drug offenses and the offense of resisting arrest were allegedly committed by defendant’s codefendant, but heard detailed testimony about these charges. This evidence concerned the police warrant squad’s search of codefendant’s mother’s home, the propriety of the search, whether codefendant was using the bedroom where the drugs were found, the volume of drugs found (10 bags of crack cocaine, a “large bag” of marijuana, and 56 ziplock bags of marijuana), the drug paraphernalia used to package crack and marijuana, codefendant’s refusal to comply with police orders, and police efforts to subdue and arrest codefendant. In total, 184 out of 400 pages, or 46%, of the trial testimony, 6 out of the 10 witnesses who testified, and 8 out of the 16 exhibits introduced at trial, related to the drug and resisting arrest counts, which, as stated, had nothing to do with defendant. The prejudicial effect of this voluminous testimony and other evidence (which came close to dominating the main issue at trial— i.e., how reliable was the complainant’s identification) is clear: the jury could logically find that because defendant was involved with his codefendant, he, like the codefendant, was involved with drugs; if the jury made that finding, an inference could be drawn that the robbery at issue was committed for a drug-related purpose (e.g., to buy drugs).

In sum, the improper joinder, and what flowed from it, arguably tainted the proceedings by creating a strong risk that the voluminous evidence, unrelated to defendant, colored the jury’s evaluation of defendant’s robbery case, and, thereby, prejudiced defendant to the point that precludes us from concluding that Supreme Court’s error is harmless.

Finally, under these circumstances, the trial court’s curative instructions did not cure the prejudice to defendant. That is, although the trial court (1) made it clear, in its final charge to the jury, that the counts of the indictment that were not related to the robbery applied only to defendant’s codefendant and not to defendant, and (2) provided the jury with separate verdict sheets as to each defendant, the court did not instruct the jury to disregard the evidence related to those unrelated counts when considering defendant’s guilt or innocence.

Accordingly, the order of the Appellate Division should be reversed and a new trial ordered.

Read, J. (dissenting).

Defendant Kevin Chestnut never protested joinder on the ground he advances on appeal. Because he did not preserve his objection, we may not review it. I would therefore affirm the conviction without reaching the issue of harmless error addressed by the majority.

CPL 200.40 (1) permits joinder of criminal counts against two or more defendants where (a) the defendants are charged with every offense alleged in the indictment, (b) all the offenses charged are based upon a common scheme or plan, (c) all of the offenses are based upon the same criminal transaction or (d) the indictment includes a count charging enterprise corruption. Joinder is prohibited where these specified circumstances do not exist (see People v Spencer, 67 AD2d 867 [1st Dept 1979]; People v Banks, 45 AD2d 1024 [2d Dept 1974]).

Further, where counts are properly joined pursuant to CPL 200.40 (1), a defendant may nonetheless move for severance upon “good cause shown” (People v Mahboubian, 74 NY2d 174, 183 [1989]; People v McGee, 68 NY2d 328, 333 [1986]). Good cause includes, but is not limited to, a finding that the defendant will be unduly prejudiced by a joint trial (see Mahboubian, 74 NY2d at 183). “Upon such a finding of prejudice, the court may order counts to be tried separately, grant a severance of defendants or provide whatever other relief justice requires” (CPL 200.40 [1]).

As the majority points out, defendant on at least nine occasions “sought to sever the joint trial or otherwise advise the court of the impropriety of a joint trial in this case” solely on the basis of the prejudicial “spillover” effect of the proof against his codefendant on the drug and resisting arrest charges (majority op at 608, 609). In short, defendant made an objection that the trial court should exercise discretion to sever the charges; he never once objected on the entirely different ground that the statute prohibited joinder altogether.

“The chief purpose of demanding notice through objection or motion in a trial court, as with any specific objection, is to bring the claim to the trial court’s attention,” thus affording the judge an opportunity to rectify an error or oversight, thereby maintaining the integrity of the eventual jury verdict in the interests of finality (People v Gray, 86 NY2d 10, 20 [1995]; see also People v Patterson, 39 NY2d 288, 294-295 [1976] [“A failure to object to a charge at a time when the trial court had an opportunity to effectively correct its instructions does not preserve any question of law that (the Court of Appeals) can review”]). Here, where defendant repeatedly focused on prejudice and did not object that CPL 200.40 (1) prohibited joinder under the circumstances presented in this case, the trial court was not apprised of and had no opportunity to rule on the latter ground (see People v Robinson, 88 NY2d 1001, 1002 [1996] [“to frame and preserve a question of law reviewable by this Court, an objection or exception must be made with sufficient specificity at the trial, when the nisi prius court has an opportunity to consider and deal with the asserted error”]). Indeed, defendant’s repeated prejudice-related objections arguably reinforced the incorrect view that joinder was proper, but that the trial judge had discretion to order severance if he agreed that defendant’s defense against the robbery counts would be unduly prejudiced by presentation of proof on the unrelated counts brought against codefendant.

It surely furthers the underlying purposes of preservation for parties to refer to the specific statutory text in a case such as this, where a statute clearly precludes the court’s actions. Even so, I would consider defendant’s objection preserved if he had at least once claimed to the trial judge that severance of the unrelated counts was required as a matter of law rather than as a matter of discretion. But he did not. Accordingly, I respectfully dissent.

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

Order reversed, etc.

      . CPL 200.40 (1) provides that defendants may be jointly charged in a single indictment if (a) “all such defendants are jointly charged with every offense”-, (b) “all the offenses charged are based upon a common scheme or plan”; (c) “all the offenses charged are based upon the same criminal transaction”; or (d) under certain circumstances, the indictment includes a count of enterprise corruption (emphasis added).

      . We conclude, consistent with the Appellate Division, that defendant’s argument was sufficiently preserved for appellate review. Contrary to the dissent’s view, defendant’s numerous requests for a severance, and other related statements in the record, not only apprised the trial court as to why severance was appropriate, they clearly indicated that the joinder of defendant and his codefendant was improper. Accordingly, the dissent’s position that defendant’s repeated objections arguably “reinforced the incorrect view that joinder was proper” such “that the trial judge had discretion to order severance” (dissenting op at 615) is untenable. CPL 200.40 (1), the sole provision that relates to the problem defendant repeatedly raised before the court, only allows a trial judge discretion to sever when joinder is proper, i.e., in accordance with the statute. Where, as argued at trial and conceded here, the joinder was improper, discretion does not apply; severance is required under the statute and severance is precisely the remedy defendant repeatedly sought. In further support of the conclusion that defendant’s argument was preserved, the court, during the prosecutor’s opening statement, confirmed that it understood defendant’s objection and, following its denial of another severance application, stated, “You have an exception. It’s noted. You don’t have to keep doing this . . . It’s preserved.”
      For preservation purposes, a party must make a specific objection regarding a claimed error in order to afford the trial court an opportunity to correct the error. However, the preservation rule’s “specific objection” requirement should not be applied in the overly technical way the dissent urges; nor should a party’s adherence to this requirement focus on minutiae or emphasize form over substance. In this case, where the facts demonstrate that defendant not only met the specific objection requirement (by repeatedly apprising the court of the error), but provided more information than was required, and where there is a judge, who is not only presumed to know the law, but has been apprised of and ruled on the specific issue numerous times, the preservation requirement is met.

      . Some degree of prejudice is inherent in every joint trial (see People v Mahboubian, 74 NY2d 174, 183-184 [1989]).


author: Smith, J.

text:
    [973 NE2d 1270, 950 NYS2d 496]
    In the Matter of Ronald Marchand, Jr., et al., Appellants, v New York State Department of Environmental Conservation, Defendant, and Incorporated Village of Bayville, Respondent.
    Argued May 31, 2012;
    decided June 27, 2012

      POINTS OF COUNSEL

      Albanese & Albanese LLP, Garden City (Bruce W. Migatz of counsel), for appellants.
    I. To become a village street by prescription a private road must be maintained by the village. (Diamond Int. Corp. v Little Kildare, 22 NY2d 819; Speir v Town of New Utrecht, 121 NY 420; People v Underhill, 144 NY 316; People v Sutherland, 252 NY 86; People v Brooklyn & Queens Tr. Corp., 273 NY 394; Impastato v Village of Catskill, 55 AD2d 714, 43 NY2d 888; Matter of Village of Chestnut Ridge v Howard, 92 NY2d 718; Town of Addison v Meeks, 233 AD2d 843; Pinsly v Town of Huntington, 81 AD3d 910; Salvador v New York State Dept. of Transp., 234 AD2d 741.) II. A village street by prescription must be maintained by the village. (Stiuso v City of New York, 87 NY2d 889; Friedman v State of New York, 67 NY2d 271; Lopes v Rostad, 45 NY2d 617; Matter of Village of Chestnut Ridge v Howard, 92 NY2d 718; Impastato v Village of Catskill, 55 AD2d 714.)

      Ackerman, Levine, Cullen, Brickman & Limmer, LLP, Great Neck (James A. Bradley of counsel), for respondent.
    I. The factual findings of the Second Department that Washington Avenue has been used by the public and that the Incorporated Village of Bayville performed over that road the municipal services it described in its affidavits cannot be reviewed by this Court. (Glenbriar Co. v Lipsman, 5 NY3d 388.) II. Where there has been the requisite period of public use, a private street becomes a village street under Village Law § 6-626 where the village has taken charge and assumed control of the street, even if the village does not maintain it. (Diamond Int. Corp. v Little Kildare, 22 NY2d 819; People v Sutherland, 252 NY 86; Speir v Town of New Utrecht, 121 NY 420; Pirman v Confer, 273 NY 357; People v Underhill, 144 NY 316; Impastato v Village of Catskill, 55 AD2d 714, 43 NY2d 888; Matter of Village of Chestnut Ridge v Howard, 92 NY2d 718; Town of Addison v Meeks, 233 AD2d 843; Nogard v Strand, 38 AD2d 871; De Haan v Broad Hollow Estates, 3 AD2d 848.) III. Services performed by the Incorporated Village of Bayville and its regulation through article III of chapter 64 of the Code of the Incorporated Village of Bayville are actions by the Village to take charge and assume control of Washington Avenue so as to support a finding that it is a village street by prescription. (Provencher v Town of Saranac, 168 AD2d 770; Stuart v Town of Wells, 161 AD2d 1073; American Nassau Bldg. Sys. v Press, 143 AD2d 789; Nogard v Strand, 38 AD2d 871; La France v Town of Altamont, 277 App Div 917; La-Salle Co. v Town of Hillsdale, 199 AD2d 685; People v Brooklyn & Queens Tr. Corp., 273 NY 394; Matter of Hillelson v Grover, 105 AD2d 484; People v Underhill, 144 NY 316.) IV The Incorporated Village of Bayville’s legislative findings made in enacting Code of the Incorporated Village of Bayville article III, chapter 64 are entitled to great weight by the court. (East N.Y. Sav. Bank v Hahn, 293 NY 622, 326 US 230; People v Walker, 81 NY2d 661; Hotel Dorset Co. v Trust for Cultural Resources of City of N.Y., 46 NY2d 358; Big Apple Ice Cream v City of New York, 7 AD3d 282.) V The Incorporated Village of Bayville is not required to maintain a village street by prescription. (Matter of Village of Chestnut Ridge v Howard, 92 NY2d 718; Stiuso v City of New York, 87 NY2d 889; Friedman v State of New York, 67 NY2d 271; Lopes v Rostad, 45 NY2d 617; Impastato v Village of Catskill, 55 AD2d 714, 43 NY2d 888.)
   OPINION OF THE COURT

Smith, J.

We hold that a private road cannot become a public street pursuant to Village Law § 6-626 if the street is not maintained and repaired by the village.

Ronald and Margaret Marchand own property in the Village of Bayville through which runs a dirt road referred to by several names, one of which is the “Travelled Way.” The Marchands assert that the road is private property, while the Village says that it is a village street. This litigation began when the Village obtained a permit from the Department of Environmental Conservation (DEC) to do drainage work under the road, and the Marchands challenged the issuance of the permit. The Village no longer seeks to do the drainage work, however, and the DEC is no longer in the case. The action now is simply one by the Marchands against the Village to quiet title to the Travelled Way.

Supreme Court, after a nonjury trial, entered a judgment in favor of the Village, declaring that the Travelled Way is a village street. The Appellate Division affirmed (Matter of Marchand v New York State Dept. of Envtl. Conservation, 84 AD3d 808 [2011]). We granted leave to appeal, and now reverse.

Village Law § 6-626 says: “All lands within the village which have been used by the public as a street for ten years or more continuously, shall be a street with the same force and effect as if it had been duly laid out and recorded as such.”

The courts below found that the Travelled Way had been “used by the public” for more than 10 years in the sense that members of the public had walked and driven along it, and the Marchands do not challenge that finding here. But, as the Village acknowledges, public use in that sense is not enough to satisfy the statute. We held more than a century ago, interpreting similar language in an earlier statute: “The road must not only be traveled upon, but it must be kept in repair or taken in charge and adopted by the public authorities” (Speir v Town of New Utrecht, 121 NY 420, 429-430 [1890]). The issue here is whether the Travelled Way has been “kept in repair or taken in charge” by the Village.

The Village acknowledges that it has not maintained or repaired the road; to the extent that that has been done, it has been done by the Marchands and their predecessors as owners of the property. But the Village claims that it has taken the property “in charge.” The Village points out that it provides police and fire protection, plows and sands the road in winter, inspects and maintains water mains and fire hydrants, and picks up garbage. The Marchands reply that the Village provides similar services on county and town roads, and say that services like these do not turn a road into a village street.

Lower court cases go both ways on the question of whether a public body can be said to have “taken in charge” a road that it does not maintain and repair (compare American Nassau Bldg. Sys. v Press, 143 AD2d 789, 791 [2d Dept 1988] [road held to be a public street “even though there has been no showing that the city engaged in regular repair”], and Jakobson v Chestnut Hill Props., 106 Misc 2d 918, 927-928 [Sup Ct, Nassau County 1981] [same] with Long Pond Assn., Inc. v Town of Carmel, 87 AD3d 525, 526 [2d Dept 2011] [roads not town highways “in the absence of proof of regular maintenance and repair ... by the Town”]). Our cases, however, agree with the Marchands’ position that a road, to be public, must be maintained and repaired by the public. In People v Sutherland (252 NY 86, 91 [1929]), we held that a road was not shown to be a public highway where there was no proof “that the town became responsible for its condition.” And in Impastato v Village of Catskill (43 NY2d 888 [1978]) we adopted the Appellate Division opinion, which said: “[N]aked use by the public is not enough, as plaintiffs must further demonstrate that the village has continuously maintained and repaired the alleged street and, thus, assumed control thereof during the period of time in question” (55 AD2d 714, 715 [3d Dept 1976]).

The rule we endorsed in Sutherland and Impastato is a fair one: a road is not public unless the public takes responsibility for maintaining and repairing it. We reaffirm that rule today.

Accordingly, the order of the Appellate Division should be reversed, with costs, and judgment granted to the Marchands declaring that the road referred to in the complaint as the “Travelled Way” is a private road and not a village street.

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

Order reversed, etc.


author: Per Curiam.

text:
    [974 NE2d 658, 950 NYS2d 612]
    In the Matter of Lafayette D. Young, Jr., a Justice of the Macomb Town Court, St. Lawrence County, Petitioner. State Commission on Judicial Conduct, Respondent.
    Argued May 31, 2012;
    decided June 26, 2012

      POINTS OF COUNSEL

      Lafayette D. Young, Jr., appellant pro se. Petitioner had a right to hear the cases due to the nonfamily relationship.

      Robert H. Tembeckjian, Albany, Edward Lindner, Mary C. Farrington and Thea Hoeth, for respondent.
    Petitioner engaged in serious misconduct warranting his removal. (Matter of LaBombard [State Commn. on Jud. Conduct], 11 NY3d 294; Matter of Going, 97 NY2d 121; Matter of Robert, 89 NY2d 745; Matter of Murphy, 82 NY2d 491; Matter of Fabrizio, 65 NY2d 275; Matter of Wait, 67 NY2d 15; Matter of Tyler, 75 NY2d 525; Matter of Sims [State Commn. on Jud. Conduct], 61 NY2d 349; Matter of Marshall, 8 NY3d 741; Matter of Assini, 94 NY2d 26.)
   OPINION OF THE COURT

Per Curiam.

Petitioner, a Justice of the Macomb Town Court, St. Lawrence County, commenced this proceeding to review a determination of the State Commission on Judicial Conduct that sustained six charges of misconduct against him and determined that he should be removed from office (see NY Const, art VI, § 22; Judiciary Law § 44). In seeking review, petitioner asserts that he lacked a familial relationship to the persons in the cases at issue and therefore had a “right to hear those cases.” Upon our plenary review of the record, we conclude that removal is the appropriate sanction.

Petitioner, a nonlawyer, served as a Macomb Town Court Justice since January 2004. By formal complaint dated February 25, 2010, the Commission served him with seven charges. Charges I to VI of the complaint alleged that, regarding numerous cases involving his paramour’s relatives, he failed to disqualify himself, failed to disclose the relationship and engaged in ex parte communications.

The Commission considered the record of the proceeding and concluded that petitioner violated numerous sections of the Rules Governing Judicial Conduct. It sustained six of the seven charges, concluding that petitioner violated the cited sections of the Rules Governing Judicial Conduct when, presiding over cases involving his paramour’s relatives, he failed to disqualify himself, failed to disclose the relationship and engaged in ex parte communications. The Commission determined that the appropriate sanction is removal.

Based on the evidence adduced at a hearing held on November 16 and 17, 2010 before a referee, the Commission found as follows. From 2005 to approximately October 2010, Robyne Petrie-Platt was petitioner’s paramour, and they resided together. Petitioner grew up with members of his paramour’s family. His sister was married to his paramour’s brother. He officiated at her parents’ marriage renewal and at a wedding of a Petrie family member. He socialized with her relatives and attended some family gatherings.

Each of the first six charges arose from petitioner’s decision to preside over a case involving a person closely related to his paramour. Charge I involved a 2007 criminal charge against a defendant for unlawfully dealing with a child in the second degree, alleging that the defendant provided alcohol to his paramour’s daughter who was under the age of 21. After an ex parte request from his paramour, the petitioner issued an order of protection directing the defendant to stay away from Ms. Petrie-Platt’s daughter. The defendant’s attorney learned from his client of the petitioner’s relationship with the complaining witness and, by letter, requested petitioner’s recusal due to the relationship. In a telephone conversation, petitioner initially refused to disqualify himself. He later signed a certificate of disqualification after defense counsel informed petitioner that he would make a motion for recusal and file a complaint with the Commission.

In charge II, in 2005, Merton Petrie, Ms. Petrie-Platt’s nephew and the son of petitioner’s former brother-in-law, was arraigned on charges of criminal mischief in the third degree and making a false written statement in Rossie Town Court. The matter was transferred to the Macomb Town Court. Petitioner accepted Mr. Petrie’s guilty plea to criminal mischief in the fourth degree in full satisfaction of both charges, as recommended by the District Attorney, and imposed a one-year conditional discharge, requiring him to perform 60 hours of community service and to pay restitution and a surcharge. Petitioner neither disqualified himself nor disclosed his relationships. In 2006, Mr. Petrie violated the terms of his conditional discharge by failing to complete the required community service. Petitioner executed a declaration of delinquency to resentence Mr. Petrie. Prior to resentencing, during a Petrie family gathering, petitioner discussed Mr. Petrie’s case with members of the Petrie family. The family members advised petitioner to send Mr. Petrie to jail. Petitioner, during that weekend, informed Mr. Petrie that he would resentence him to jail for failing to complete community service. He also had other ex parte communications concerning that matter with Ms. Petrie-Platt’s mother and sister. Mr. Petrie’s attorney learned of the ex parte conversations and requested that petitioner recuse himself. He did not. In September 2006, after the St. Lawrence County Department of Probation recommended that Mr. Petrie receive three years of probation, petitioner resentenced Mr. Petrie to 45 days in jail and three years’ probation for violating the terms of his conditional discharge. Mr. Petrie had two additional cases before petitioner in April 2007 and July 2008 where petitioner neither disqualified himself nor disclosed his relationship with the defendant’s aunt and father.

Similarly, charge III involved a case before petitioner in which Sandra Petrie, Ms. Petrie-Platt’s mother, was the complaining witness. There, the defendant, Sandra Petrie’s granddaughter by marriage, was charged with petit larceny for allegedly using the telephone of Sandra Petrie to make long-distance phone calls without her permission and consent. Petitioner issued a temporary order of protection in Sandra Petrie’s favor. The District Attorney was unaware of the family relationships among the parties and petitioner. Petitioner discussed the case ex parte with his paramour and her sister. Petitioner neither disqualified himself nor disclosed his relationships with the complaining witness and her daughter.

As to charge James R Petrie, Jr., a nephew of Ms. Petrie-Platt, was charged with criminal mischief in the third degree, among other charges. Petitioner dismissed the charge of criminal mischief in the third degree for facial insufficiency at the request of Mr. Petrie’s attorney and without notice to or consent of the prosecution. Petitioner neither disqualified himself nor disclosed his relationship to the defendant’s aunt. In charge V, in 2007, petitioner dismissed, without notice to or the consent of the prosecution, a charge for failure to wear a helmet on an ATV against Scott Parker, another nephew of Ms. Petrie-Platt. Petitioner neither disqualified himself nor disclosed his relationship to the defendant’s aunt. In charge VI, Justin R. Petrie, another nephew of petitioner’s paramour was before petitioner for the unsafe backing in violation of section 1211 (a) of the Vehicle and Traffic Law. Petitioner dismissed the charge despite a negotiated plea between the defendant and the District Attorney’s office. Petitioner neither disqualified himself nor disclosed his relationship with the defendant’s aunt.

Petitioner contends that he did not violate any Rules Governing Judicial Conduct because he presided over cases involving persons of no familial relation to him by marriage. We conclude, after a full record, that each of the charges is established.

Rules Governing Judicial Conduct (22 NYCRR) § 100.3 (E) (1) clearly states, “A judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned.” Additionally, “[a] judge shall not initiate, permit, or consider ex parte communications, or consider other communications made to the judge outside the presence of the parties or their lawyers concerning a pending or impending proceeding” (22 NYCRR 100.3 [B] [6]). A judge has “a duty to conduct himself in such a manner as to inspire public confidence in the integrity, fair-mindedness and impartiality of the judiciary” (Matter of Esworthy, 77 NY2d 280, 282 [1991]).

Petitioner engaged in serious misconduct when he presided over matters involving persons with whom he and his paramour had close relationships (see Matter ofLaBombard [State Commn. on Jud. Conduct], 11 NY3d 294 [2008]; Matter of Robert, 89 NY2d 745 [1997]; Matter of Fabrizio, 65 NY2d 275 [1985]). In all cases, but one, petitioner neither disqualified himself nor disclosed his relationship to the defendant or complaining witness. Additionally, in many of the cases at issue, petitioner’s conduct gave the appearance of favoritism towards the Petrie family defendant or complaining witness. Moreover, the ex parte communications further exacerbated petitioner’s improper conduct as they highlight his close relationships to the Petrie family and his partiality towards them. Such conduct demonstrates a misuse of his judicial office and damages public confidence in his integrity and impartiality.

Accordingly, the determined sanction of removal should be accepted, without costs.

Chief Judge Lippman and Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur in per curiam opinion.

Determined sanction accepted, without costs, and Lafayette D. Young, Jr. removed from the office of Justice of the Macomb Town Court, St. Lawrence County.

      . Charge VII alleged that he engaged in improper political activity; it was dismissed.

      . The Commission concluded that petitioner violated the following sections among others. “A judge should participate in establishing, maintaining and enforcing high standards of conduct, and shall personally observe those standards so that the integrity and independence of the judiciary will be preserved” (22 NYCRR 100.1). “A judge shall respect and comply with the law and shall act at all times in a manner that promotes public confidence in the integrity and impartiality of the judiciary” (22 NYCRR 100.2 [A]). “A judge shall not allow family, social, political or other relationships to influence the judge’s judicial conduct or judgment” (22 NYCRR 100.2 [B]). “A judge shall not lend the prestige of judicial office to advance the private interests of the judge or others; nor shall a judge convey or permit others to convey the impression that they are in a special position to influence the judge” (22 NYCRR 100.2 [C]). “A judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned” (22 NYCRR 100.3 [E] [1]). “A judge shall not initiate, permit, or consider ex parte communications, or consider other communications made to the judge outside the presence of the parties or their lawyers concerning a pending or impending proceeding” (22 NYCRR 100.3 [B] [6]).