text:
    [938 NE2d 924, 912 NYS2d 491]
    In the Matter of Sylvie Grimm, Respondent, v State of New York Division of Housing and Community Renewal Office of Rent Administration, Appellant. 151 Owners Corp., Intervenor-Appellant.
    Argued September 13, 2010;
    decided October 19, 2010

      POINTS OF COUNSEL

      Gary R. Connor, General Counsel, New York State Division of Housing and Community Renewal, New York City (Martin B. Schneider of counsel), for appellant.
    The Division of Housing and Community Renewal’s order determining that there was no rent overcharge is supported by a rational basis in the record and the law and is fully entitled to judicial affirmance. (Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222; Matter of Peckham v Calogero, 12 NY3d 424; Matter of Gaines v New York State Div. of Hous. & Community Renewal, 90 NY2d 545; Matter of Hatanaka v Lynch, 304 AD2d 325; Matter of Silver v Lynch, 283 AD2d 213; Rovito v Melendez, 175 Misc 2d 279; Matter of Partnership 92 LP v State of N.Y. Div. of Hous. & Community Renewal, 11 NY3d 859; Thornton v Baron, 5 NY3d 175; Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144; Matter of Hawco v State of N.Y. Div. of Hous. & Community Renewal, 281 AD2d 294.)

      Belkin Burden Wenig & Goldman, LLP, New York City
      (Magda L. Cruz, Sherwin Belkin and Alexa Englander of counsel), for intervenor-appellant.
    I. There was no legal basis to disturb the Division of Housing and Community Renewal’s order denying tenant’s overcharge complaint. (Catlin v Sobol, 77 NY2d 552; Matter of Purdy v Kreisberg, 47 NY2d 354; Matter of Ansonia Residents Assn. v New York State Div. of Hous. & Community Renewal, 75 NY2d 206; Matter of Mid-State Mgt. Corp. v New York City Conciliation & Appeals Bd., 112 AD2d 72, 66 NY2d 1032; Roberts v Tishman Speyer Props., L.P., 13 NY3d 270; NLRB v Hearst Publications, Inc., 322 US 111; Matter of Salvati v Eimicke, 72 NY2d 784; Matter of Chinitz v New York State Div. of Hous. & Community Renewal, 191 AD2d 222.) II. The four-year rule bars examination of the apartment’s rental history preceding the base date. (Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144; Zafra v Pilkes, 245 AD2d 218; Matter of Hawco v State of N.Y. Div. of Hous. & Community Renewal, 281 AD2d 294; Matter of Payne v New York State Div. of Hous. & Community Renewal, 287 AD2d 415; Matter of Anderson v Lynch, 292 AD2d 603; Myers v Frankel, 292 AJD2d 575; Theoharidou v Newgarden, 176 Misc 2d 97; Rovito v Melendez, 175 Misc 2d 279; Matter of Brinckerhoff v New York State Div. of Hous. & Community Renewal, 275 AD2d 622; Matter of Silver v Lynch, 283 AD2d 213.) III. The cases relied on by the courts below are inapplicable to the facts at bar. (Thornton v Baron, 5 NY3d 175; Levinson v 390 W. End Assoc., L.L.C., 22 AD3d 397; Drucker v Mauro, 30 AD3d 37, 7 NY3d 844; Matter of Gomez v New York State Div. of Hous. & Community Renewal, 23 Misc 3d 1107[A], 2009 NY Slip Op 50613[U]; Oxford Towers Co., LLC v Wagner, 58 AD3d 422; Stecher v 85th Estates Co., 43 AD3d 732; Blanco v American Tel. & Tel. Co., 90 NY2d 757; Duffy v Horton Mem. Hosp., 66 NY2d 473; Jensen v General Elec. Co., 82 NY2d 77; Matter of King v Carey, 57 NY2d 505.) IV Tenant’s “fraud” allegations were not meritorious. (Matter of Peckham v Calogero, 12 NY3d 424; Bingham v New York City Tr. Auth., 99 NY2d 355; Persky v Bank of Am. N.A., 261 NY 212; Matter of Muller v New York State Div. of Hous. & Community Renewal, 263 AD2d 296; Matter of McCarthy v New York State Div. of Hous. & Community Renewal, 290 AD2d 313; Matter of Orin Mgt. Corp. v New York State Div. of Hous. & Community Renewal, 275 AD2d 126, 97 NY2d 630; Newgarden v Theoharidou, 247 AD2d 367; Matter of Giffuni Bros. v New York State Div. of Hous. & Community Renewal, 211 AD2d 545; Otto Roth & Co. v Gourmet Pasta, 277 AD2d 293; Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403.)

      Legal Services NYC, Brooklyn (Edward Josephson of counsel), for respondent.
    I. The Appellate Division properly applied this Court’s holding in Thornton v Baron (5 NY3d 175 [2005]) to the proceeding below. (Myers v Frankel, 184 Misc 2d 608, 292 AD2d 575; Cecilia v Irizarry, 292 AD2d 557; Levinson v 390 W. End Assoc., L.L.C., 22 AD3d 397; Matter of Mangano v New York State Div. of Hous. & Community Renewal, 30 AD3d 267; Ruradan Corp. v Natiello, 21 Misc 2d 1129[A], 2008 NY Slip Op 52279DJ]; Jazilek v Abart Holdings LLC, 10 NY3d 943; Drucker v Mauro, 30 AD3d 37; Matter of Partnership 92 LP v State of N.Y. Div. of Hous. & Community Renewal, 11 NY3d 859; Matter of Ador Realty, LLC v Division of Hous. & Community Renewal, 25 AD3d 128; Matter of H.O. Realty Corp. v State of N.Y. Div. of Hous. & Community Renewal, 46 AD3d 103.) II. The Appellate Division properly remanded this proceeding to the Division of Housing and Community Renewal based on substantial indicia of fraud in the record. (Jazilek v Ahart Holdings LLC, 10 NY3d 943; Drucker v Mauro, 30 AD3d 37.) III. The Division of Housing and Community Renewal’s interpretation of the Rent Stabilization Law of 1969 is not entitled to special deference. (Roberts v Tishman Speyer Props., L.P., 13 NY3d 270; Matter of KSLM-Columbus Apts., Inc. v New York State Div. of Hous. & Community Renewal, 5 NY3d 303; Matter of Dworman v New York State Div. of Hous. & Community Renewal, 94 NY2d 359; Matter of ATM One v Landaverde, 2 NY3d 472.)

      Rosenberg & Estis, PC., New York City (Jeffrey Turkel of counsel), for Rent Stabilization Association of NYC, Inc., amicus curiae.
    The legislative history of Rent Stabilization Law of 1969 (Administrative Code of City of NY) § 26-516 (a) establishes that the Division of Housing and Community Renewal, in its challenged order, correctly interpreted and applied the statute by refusing to examine rental events occurring outside the four-year period of limitations. (Pultz v Economakis, 10 NY3d 542; Matter of ATM One v Landaverde, 2 NY3d 472; Consedine v Portville Cent. School Dist., 12 NY3d 286; Matter of Sutka v Conners, 73 NY2d 395; Myers v Frankel, 184 Misc 2d 608, 292 AD2d 575; Matter of Round Hill Mgt. Co. v Higgins, 177 AD2d 256; Zafra v Pilkes, 245 AD2d 218; Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144; Thornton v Baron, 5 NY3d 175; Consedine v Portville Cent. School Dist., 12 NY3d 286.)

      Horing Welikson & Rosen, P.C., Williston Park (Niles C. Welikson of counsel), for Community Housing Improvement Program, amicus curiae.
    I. The Appellate Division’s holding in this matter is contrary to its own prior decisions and erroneously adds an exception to statutory criteria. (Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144; Matter of Orin Mgt. Corp. v New York State Div. of Hous. & Community Renewal, 275 AD2d 126; Matter of Mengoni v New York State Div. of Hous. & Community Renewal, 97 NY2d 630; Matter of H.O. Realty Corp. v State of N.Y. Div. ofHous. & Community Renewal, 46 AD3d 103; Zafra v Pilkes, 245 AD2d 218; Matter of Muller v New York State Div. of Hous. & Community Renewal, 263 AD2d 296; East W. Renovating Co. v New York State Div. of Hous. & Community Renewal, 16 AD3d 166; Thornton v Baron, 5 NY3d 175.) II. The Appellate Division’s determination constitutes impermissible judicial legislation as well as an erroneous shifting of the burden of proof where a claim of fraud is involved. (Prego v City of New York, 147 AD2d 165; Matter of Daniel C., 99 AD2d 35, 63 NY2d 927; Nathan v Equitable Trust Co., 222 App Div 389; New York Univ. v Continental Ins. Co., 87 NY2d 308; Matter of Muller v New York State Div. of Hous. & Community Renewal, 263 AD2d 296.)
   OPINION OF THE COURT

Ciparick, J.

On this appeal, we are asked to determine whether the rationale employed in Thornton v Baron (5 NY3d 175 [2005]), which allowed the parties to look back farther than four years, applies in a situation where it is alleged that the standard base date rent is tainted by fraudulent conduct on the part of a landlord. We conclude that it does, and that such base date rent may not be used as a basis for calculating subsequent regulated rent if fraud is indeed present.

I.

In 1999, prior to the tenancy of petitioner Sylvie Grimm, the rent-stabilized apartment at issue here was registered with the Division of Housing and Community Renewal (DHCR) at a monthly rent of $578.86. In 2000, upon a vacancy in the apartment, rather than using the required rent-setting formula to determine the rent that it could legally charge the next tenants of the apartment, the owner notified prospective tenants that the rent for the subject apartment was $2,000 per month. However, the owner informed the prospective tenants that, if they agreed to make certain repairs and improvements to the apartment at their own expense, the rent would be reduced to $1,450. Both sums were unlawful because of the rent-stabilized status of the apartment. The tenants accepted the offer, and signed a written lease agreement without a rent-stabilized lease rider. The owner apparently did not provide those tenants with a statement showing the apartment was registered with DHCR.

In 2004, petitioner moved into the apartment, agreeing to the rental rate of $1,450. Her initial lease did not specify that the apartment was rent stabilized. Thereafter, in July 2005, petitioner filed a rent overcharge complaint with DHCR. The landlord, intervenor 151 Owners Corp., soon after receiving the overcharge complaint, sent petitioner revised versions of her 2004 and 2005 leases which advised that the apartment was subject to rent stabilization. In its answer to the overcharge complaint, 151 Owners Corp. admitted that the apartment had not been registered with DHCR since 1999. At the same time it filed the answer to the overcharge complaint, 151 Owners Corp. filed registration statements with DHCR for the years 2001 through 2005.

In an order dated June 21, 2006, the DHCR Rent Administrator denied petitioner’s overcharge complaint on the ground that the rent on the “base date”—i.e., the date four years prior to the filing of the complaint—was $1,450, and the rent adjustments subsequent to the base date had been lawful. The Rent Administrator did not address the issue whether the registration statement in effect on the base date was reliable or set forth a lawful rent. DHCR denied petitioner’s request for administrative review of the Rent Administrator’s determination, and denied her request for reconsideration.

Petitioner thereafter commenced this CPLR article 78 proceeding challenging DHCR’s determination denying administrative review. The petition sought (1) a declaration that she was the legal rent-stabilized tenant of the apartment and (2) remand to DHCR “with the direction that the rent for the subject apartment should be frozen at the 1999 amount, because the owner failed to register the subject apartment for 2000, and computing the rent overcharge amount.”

Supreme Court granted the petition, vacated DHCR’s determination and “remanded [the matter] . . . for reconsideration in accordance with [the court’s] decision” (2007 NY Slip Op 34184[U], *5). Supreme Court noted that DHCR’s determination simply calculated the rent by assuming, without actually determining, that the registration in effect on the base date was reliable. The court also noted that DHCR did not specifically reject petitioner’s allegations of fraud. The court reasoned, under Thornton v Baron (5 NY3d 175, 181 [2005]), that DH-CR’s failure to consider petitioner’s allegations of fraud and the reliability of the rent charged on the base date warranted remand to the agency for de novo review of the overcharge complaint.

DHCR and 151 Owners Corp. separately appealed. The Appellate Division affirmed, with two Justices dissenting (Matter of Grimm v State of N.Y. Div. of Hous. & Community Renewal Off. of Rent Admin., 68 AD3d 29 [1st Dept 2009]). The court reasoned:

“Given the specific facts of this case, DHCR should not be allowed to turn a blind eye to what could be fraud and an attempt by the landlord to circumvent the Rent Stabilization Law . . .
“[W]here, as here, there is an indication of possible fraud that would render the rent records unreliable, it is an abuse of discretion for DHCR not to investigate it” (id. at 33).

The two dissenting Justices voted to reverse and “would [have found] that [DHCR] acted rationally in complying with the legislative intent expressed in the statute of limitations set forth in CPLR 213-a and [the] Rent Stabilization Law” (id. at 34 [Buckley, J., dissenting]).

DHCR and 151 Owners Corp. appealed by permission of the Appellate Division, which certified the following question: “Was the order of Supreme Court, as affirmed by this Court, properly made?” We now affirm and answer the certified question in the affirmative.

II.

As we have previously explained, rent overcharge claims are generally subject to a four-year statute of limitations. Specifically, Rent Stabilization Law of 1969 (Administrative Code of City of NY) § 26-516 (hereinafter Rent Stabilization Law), as amended by the Rent Regulation Reform Act (RRRA) of 1997, states:

“[A] complaint under this subdivision shall be filed with [DHCR] within four years of the first overcharge alleged and no determination of an overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed . . . This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision” (Rent Stabilization Law § 26-516 [a] [2]; see also CPLR 213-a).

The RRRA “clarified and reinforced the four-year statute of limitations applicable to rent overcharge claims ... by limiting examination of the rental history of housing accommodations prior to the four-year period preceding the filing of an overcharge complaint” (Thornton, 5 NY3d at 180, citing Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144, 149 [2002]; see also Matter of Cintron v Calogero, 15 NY3d 347 [2010] [decided today]; Governor’s Approval Mem, Bill Jacket, L 1997, ch 116). To effectuate the purpose of the four-year limitations period, in rent overcharge cases DHCR regulations, as relevant here, set the “legal regulated rent” as the rent charged on the “base date,” which is the “date four years prior to the date of the filing of [the overcharge] complaint” plus any subsequent lawful increases (9 NYCRR 2520.6 [e], [f] [1]; 2526.1 [a] [3] [i]).

The four-year limitations period was explained in our decision in Thornton (5 NY3d 175 [2005]), where we held that a lease provision purporting to exempt an apartment from the Rent Stabilization Law in exchange for an agreement not to use the apartment as a primary residence was void as against public policy (see id. at 179-180). Our ruling was made in connection with a scheme between a landlord and an illusory tenant to agree that an apartment would not be used as the named tenant’s primary residence, resulting in the elimination of the rent-stabilized status of the apartment. Acknowledging that the apartment’s prior rental history could not be examined, and that the stabilized rent before the fraudulent scheme was of no relevance, we nonetheless rejected the owner’s contention that “the legal regulated rent should be established by simple reference to the rental history” on the date four years prior to the commencement of the overcharge action (id. at 180-181). We explained that the lease was “void at its inception” because its “circumvention of] the Rent Stabilization Law” violated public policy (id. at 181). As a result, the rent registration statement in effect on the base date “listing this illegal rent was also a nullity” (id.). Rather than using the registration statement to ascertain the rent on the base date, we instructed DHCR to use the so-called default formula to calculate the rent on the base date, as it does when no reliable records are available (see id.; see also Levinson v 390 W. End Assoc., L.L.C., 22 AD3d 397, 400-401 [1st Dept 2005]).

DHCR contends that our holding in Thornton should be constrained to the narrow set of circumstances described in that case and that we should limit its application to cases involving illusory tenancies. We disagree and conclude that, where the overcharge complaint alleges fraud, as here, DHCR has an obligation to ascertain whether the rent on the base date is a lawful rent. Accordingly, here, as the Appellate Division concluded, DHCR acted arbitrarily and capriciously in failing to meet that obligation where there existed substantial indicia of fraud on the record.

In particular, here it is alleged that the tenants immediately preceding petitioner paid significantly more than the previously registered rent, and were not given a rent-stabilized lease rider. Moreover those tenants were informed that their rent would be higher but for their performance of upgrades and improvements at their own expense. Almost simultaneously with the substantial increase in the rent for the affected unit, the owner ceased filing annual registration statements (see Rent Stabilization Code [9 NYCRR] § 2528.3 [a] [requiring annual registration statements be filed with DHCR]) and later filed several years’ registration statements retroactively after receiving petitioner’s overcharge complaint. Finally, petitioner’s initial lease did not contain a rent-stabilized rider. The combination of these factors should have led DHCR to investigate the legality of the base date rent, rather than blindly using the rent charged on the date four years prior to the filing of the rent overcharge claim.

Our holding should not be construed as concluding that fraud exists, or that the default formula should be used in this case. Rather, we merely conclude that DHCR acted arbitrarily in disregarding the nature of petitioner’s allegations and in using a base date without, at a minimum, examining its own records to ascertain the reliability and the legality of the rent charged on that date.

DHCR also argues that, under the Appellate Division’s holding, any “bump” in an apartment’s rent—even those authorized without prior DHCR approval, such as rent increases upon installation of improvements to an apartment (see Rent Stabilization Law § 26-511 [c] [13])—will establish a colorable claim of fraud requiring DHCR investigation. Again, we disagree. Generally, an increase in the rent alone will not be sufficient to establish a “colorable claim of fraud,” and a mere allegation of fraud alone, without more, will not be sufficient to require DHCR to inquire further. What is required is evidence of a landlord’s fraudulent deregulation scheme to remove an apartment from the protections of rent stabilization. As in Thornton, the rental history may be examined for the limited purpose of determining whether a fraudulent scheme to destabilize the apartment tainted the reliability of the rent on the base date.

In sum, the Appellate Division correctly applied Thornton to this rent overcharge proceeding and properly concluded that DHCR has an obligation to ascertain whether petitioner’s allegations of fraud warrant the use of the default formula when calculating any rent overcharge that may have occurred. Accordingly, the order of the Appellate Division should be affirmed, with costs, and the certified question answered in the affirmative.

Smith, J. (dissenting).

In Thornton v Baron (5 NY3d 175 [2005]) and Matter of Cintron v Calogero (15 NY3d 347 [2010] [decided today]), the Court carved out exceptions to the command of the Rent Regulation Reform Act of 1997 that a rent charged more than four years before a tenant complains may not be considered in deciding an overcharge claim. But in this case, the majority goes far beyond making an exception. The majority has, in substance, largely repealed the statute—or, perhaps, has turned it into a source of endlessly complex litigation. I am not sure which it has done, and I am not sure which is worse.

The statute and the regulations implementing it are unequivocal.

“[N]o determination of an overcharge and no award or calculation of an award of the amount of an overcharge may be based upon an overcharge having occurred more than four years before the complaint is filed .... This paragraph shall preclude examination of the rental history of the housing accommodation prior to the four-year period preceding the filing of a complaint pursuant to this subdivision” (Rent Stabilization Law [RSL] of 1969 [Administrative Code of City of NY] § 26-516 [a] [2]; see also id. § 26-516 [a] [“Where the amount of rent set forth in the annual rent registration statement filed four years prior to the most recent registration statement is not challenged within four years of its filing, neither such rent nor service of any registration shall be subject to challenge at any time thereafter”]; Rent Stabilization Code [9 NYCRR] § 2526.1 [a] [2]).

Thornton and Cintron presented special situations in which, for understandable reasons, a majority of the Court decided that this language should not be taken literally. Thornton involved an elaborate fraudulent scheme, in which illusory leases containing false representations were created, collusive lawsuits brought and a court misled into entering orders that made it possible to collect illegal rents; the Court held that such an extreme form of misconduct should not be protected by the four-year time bar. Cintron presented the problem of how to reconcile the four-year limitation with another section of the statute providing for rent reduction orders of indefinite duration.

But this is a garden-variety overcharge case—perhaps the paradigm of the situation for which the four-year limitation was intended. The landlord charged an illegal rent, and the illegality went undetected for more than four years. The statute says plainly that in such a case, the rent charged four years previously shall not be subject to challenge. But the majority holds that a challenge is allowed.

The majority’s justification for this result is that “the overcharge complaint alleges fraud” and that there are “indicia of fraud”—consisting essentially of allegations that the landlord lied to previous tenants about what the legal maximum rent was (majority op at 366). In other words, the majority seems to equate “fraud” with a wilful overcharge—as though the four-year limit were applicable only to landlords who overcharge by mistake. In fact, the statute contains its own remedy for wilful overcharges: treble damages (RSL § 26-516 [a]). It does not make the four-year limitation inapplicable in wilful overcharge cases—cases which, as the Legislature certainly knew, are a large number of the cases to which the limitation on its face applies.

The majority seemingly tries to temper its holding by saying that “an increase in the rent alone will not be sufficient to establish a ‘colorable claim of fraud’ ” and that “a mere allegation of fraud alone, without more, will not be sufficient to require DHCR to inquire further” (majority op at 367). But obviously it does not take much “more” than an allegation of fraud—there is practically nothing more in this case. The majority adds that what DHCR is supposed to “inquire” about is whether there was a “fraudulent scheme to destabilize the apartment” (id..). It does not say what it takes to prove such a “fraudulent scheme.” Simply a wilful overcharge? A wilful overcharge coupled with the hope that the overcharge will eventually result in the apartment’s escape from rent stabilization?

If the majority opinion does not simply nullify the four-year limit in every case where the overcharge was not a good faith error, it requires DHCR to undertake an inquiry that the majority leaves wholly undefined. And what if DHCR’s inquiry shows that, though there was a wilful overcharge, there was no “fraudulent scheme”? Does this mean that, if the landlord has been charging an illegal rent for more than four years, it may continue to do so?

The majority opinion can be read to mean either that the four-year limitation has largely ceased to exist, or that any case to which the limit applies on its face must lead to a mini-litigation, in which DHCR tries to figure out whether the overcharge was “fraudulent” enough to escape the time limit. If the former, the majority has simply tossed aside the Legislature’s command. If the latter, I do not envy DHCR its task.

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

Order affirmed, etc.

      . The default formula “uses the lowest rent charged for a rent-stabilized apartment with the same number of rooms in the same building on the relevant base date” (Thornton, 5 NY3d at 180 n 1; Levinson, 22 AD3d at 400-401).

        . The Rent Stabilization Code requires that, for each vacancy or renewal lease for premises subject to the Rent Stabilization Code, the landlord “shall furnish to each tenant signing a vacancy or renewal lease, a rider in a form promulgated or approved by the DHCR, in larger type than the lease, describing the rights and duties of owners and tenants as provided for under” the Rent Stabilization Law (Rent Stabilization Code [9 NYCRR] § 2522.5 [c] [1]).


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [938 NE2d 325, 912 NYS2d 172]
    James Sykes et al., Appellants, v RFD Third Avenue 1 Associates, LLC, et al., Defendants, and Cosentini Associates, LLP, Respondent.
    Argued September 14, 2010;
    decided October 19, 2010

      POINTS OF COUNSEL

      Adam Leitman Bailey, P.C., New York City (Jeffrey R. Metz, Adam Leitman Bailey, John M. Desiderio and Donald B. Mitchell of counsel), for appellants.
    Appellants sufficiently pleaded a cause of action for negligent misrepresentation against Cosentini Associates, LLP (Leon v Martinez, 84 NY2d 83; Guggenheimer v Ginzburg, 43 NY2d 268; Barr v Wackman, 36 NY2d 371; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11; Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377; Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417; Credit Alliance Corp. v Arthur Andersen & Co., 65 NY2d 536; Parrott v Coopers & Lybrand, 263 AD2d 316; Board of Mgrs. of Astor Terrace Condominium v Schuman, Lichtenstein, Claman & Efron, 183 AD2d 488; BriDen Constr. Co., Inc. v Kapell & Kostow Architects, P.C., 56 AD3d 355.)

      Wilson Elser Moskowitz Edelman & Dicker LLP, New York City (Richard E. Lerner and Judy C. Selmeci of counsel), for respondent.
    I. James and Ellen Sykes are not alleged to have been and were not “known” to Cosentini Associates, LLP at the time of its contract with RED Third Avenue 1 Associates, LLC. (BriDen Constr. Co., Inc. v Kapell & Kostow Architects, P.C., 56 AD3d 355; Securities Inv. Protection Corp. v BDO Seidman, 95 NY2d 702.) II. James and Ellen Sykes’ complaint fails to allege a relationship of or approaching privity. Absent such a relationship, the cause of action for negligent misrepresentation fails. (Parrott v Coopers & Lybrand, 95 NY2d 479; Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417; Board of Mgrs. of Astor Terrace Condominium v Schuman, Lichtenstein, Claman & Efron, 183 AD2d 488.) III. James and Ellen Sykes failed to allege what statement made by Cosentini Associates, LLP contained a misrepresentation. (Carle Place Union Free School Dist. v Bat-Jac Constr., Inc., 28 AD3d 596.) IV James and Ellen Sykes’ action is time-barred. (Yoshiharu Igarashi v Shohaku Higashi, 289 AD2d 128.)
   OPINION OF THE COURT

Smith, J.

We hold that an action for negligent misrepresentation must be dismissed where the complaint does not allege that the misrepresentations were made with knowledge that plaintiffs would rely on them.

Cosentini Associates, a mechanical engineering firm, was hired to design the heating, ventilation and air conditioning systems for a Manhattan condominium. Plaintiffs, who bought an apartment in the building, claim that Cosentini designed the systems negligently, with the result that their apartment was too cold in winter and too hot in summer. They brought claims against Cosentini for breach of contract, professional malpractice, fraud and negligent misrepresentation. It is now undisputed that the first two of those claims are barred by the statute of limitations, and that plaintiffs have not pleaded a valid fraud claim. Only the claim for negligent misrepresentation is now before us.

That claim is based on statements made in the offering plan given to plaintiffs before they purchased their apartment. The plan contained descriptions of the heating and air conditioning systems, saying among other things that they were capable of maintaining certain indoor temperatures in hot and cold weather. Plaintiffs allege that these statements can be attributed to Cosentini; that Cosentini was negligent in making them; that the statements were false; and that plaintiffs relied on them in purchasing their apartment.

Supreme Court denied Cosentini’s motion to dismiss the claim (2007 NY Slip Op 34431[U]). The Appellate Division, with two Justices dissenting, reversed, holding that plaintiffs had failed to allege a relationship between themselves and Cosentini of the kind that is necessary in a negligent misrepresentation case (67 AD3d 162 [2009]). Plaintiffs appeal to this Court as of right, pursuant to CPLR 5601 (a), and we now affirm.

It has long been the law in New York that a plaintiff in an action for negligent misrepresentation must show either privity of contract between the plaintiff and the defendant or a relationship “so close as to approach that of privity” (Ultramares Corp. v Touche, 255 NY 170, 182-183 [1931, Cardozo, Ch. J.]; see Glanzer v Shepard, 233 NY 236 [1922, Cardozo, J.]). In Credit Alliance Corp. v Arthur Andersen & Co. (65 NY2d 536, 551 [1985]), an action against a firm of accountants, we listed “certain prerequisites” that “must be satisfied” before the necessary relationship will be found to exist:

“(1) the accountants must have been aware that the financial reports were to be used for a particular purpose or purposes; (2) in the furtherance of which a known party or parties was intended to rely; and (3) there must have been some conduct on the part of the accountants linking them to that party or parties, which evinces the accountants’ understanding of that party or parties’ reliance.”

We have made clear since Credit Alliance that these requirements do not apply to accountants only—indeed, we have applied them in an action against engineering firms (Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417, 424 [1989]).

Plaintiffs’ claim here fails the second branch of the Credit Alliance test: plaintiffs have not sufficiently alleged that they were a “known party or parties,” as Credit Alliance requires. While Cosentini obviously knew in general that prospective purchasers of apartments would rely on the offering plan, there is no indication that it knew these plaintiffs would be among them, or indeed that Cosentini knew or had the means of knowing of plaintiffs’ existence when it made the statements for which it is being sued.

The words “known party or parties” in the Credit Alliance test mean what they say. That is confirmed by Westpac Banking Corp. v Deschamps (66 NY2d 16 [1985]), decided a few months after Credit Alliance. There the plaintiff, Westpac, had made a bridge loan to a borrower, Turnkey, that was unable to repay it. Westpac sued an accounting firm, Seidman, for negligently certifying Turnkey’s financial statements. Westpac alleged that, when Seidman made the certification, it knew that a bridge lender would rely on it, and that it knew or could have known that Westpac was a possible bridge lender. We held that this was not enough:

“Westpac claims only that it was one of a class of ‘potential bridge lenders,’ to which class as a whole Seidman owed a duty, and that it should be considered a ‘known party’ because it was as of the date of the certification a substantial lender to Turnkey, and ‘thus a prime candidate for a bridge loan.’ This is not, however, the equivalent of knowledge of ‘the identity of the specific nonprivy party who would be relying upon the audit reports’ (Credit Alliance Corp. v Andersen & Co., 65 NY2d, at p 554, supra).” (Id. at 19.)

Westpac was, if anything, a stronger case for the plaintiff than this one. Here, it is not even alleged that Cosentini knew or had the means of knowing that plaintiffs were possible purchasers of an apartment. Since Cosentini did not know “the identity of the specific nonprivy party who would be relying,” the complaint falls short of satisfying the Credit Alliance test. Board of Mgrs. of Astor Terrace Condominium v Schuman, Lichtenstein, Claman & Efron (183 AD2d 488 [1st Dept 1992]), relied on by the Appellate Division dissenters, is, as the Appellate Division majority pointed out, inconsistent with Credit Alliance and our cases applying it.

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

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

Order affirmed, with costs.


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

text:
    [938 NE2d 937, 912 NYS2d 504]
    Jon Flemming, Individually and as the Administrator of the Estate of Elizabeth Lagai, Deceased, on Behalf of Himself and All Others Similarly Situated, Respondent, v Barnwell Nursing Home and Health Facilities, Inc., Defendant. Caroline Ahlfors Mouris, Appellant; Paul Macari, Respondent.
    Argued September 13, 2010;
    decided October 21, 2010

      POINTS OF COUNSEL

      Michael S. Gruen, New York City, for appellant.
    I. Fees are awardable to objectant’s counsel for services resulting in actual benefit to the class. (Frankenstein v McCrory Corp., 425 F Supp 762; In re Horizon/CMS Healthcare Corp. Sec. Litig., 3 F Supp 2d 1208; Matter of Attorney-General v Northern Am. Life Ins. Co., 91 NY 57; Klein v Robert’s Am. Gourmet Food, Inc., 28 AD3d 63; White v Auerbach, 500 F2d 822; Winkelman v General Motors Corp., 44 F Supp 960, 48 F Supp 504, affd sub nom. Singer v General Motors Corp., 136 F2d 905; In re Prudential Ins. Co. of Am. Sales Practices Litig., 962 F Supp 450, 148 F3d 283, cert denied sub nom. Krell v Prudential Ins. Co. of Am., 525 US 1114; Bowling v Pfizer, Inc., 927 F Supp 1036, 103 F3d 128, cert denied sub nom. Ridgeway v Pfizer, Inc., 522 US 906; Duhaime v John Hancock Mut. Life Ins. Co., 2 F Supp 2d 175; In re General Motors Corp. Pick-Up Truck Fuel Tank Prods. Liab. Litig., 55 F3d 768.) II. The same guidelines that govern fees to class counsel should govern fees to counsel for objectant. (Wininger v SI Mgt. L.P., 301 F3d 1115; Frankenstein v McCrory Corp., 425 F Supp 762; Gottlieb v Barry, 43 F3d 474; In re Horizon/CMS Healthcare Corp. Sec. Litig., 3 F Supp 2d 1208; Hensley v Eckerhart, 461 US 424; Matter of Rahmey v Blum, 95 AD2d 294; Washington Fed. Sav. & Loan Assn. v Village Mall Townhouses, 90 Misc 2d 227; Sternberg v Citicorp Credit Servs., 110 Misc 2d 804; Duhaime v John Hancock Mut. Life Ins. Co., 2 F Supp 2d 175; Roberts v Texaco, Inc., 979 F Supp 185.)

      DeGraff, Foy & Kunz, LLP, Albany (George J. Szary, David F. Kunz and Aaron F. Carbone of counsel), for respondent.
    I. The clear and unambiguous language of CPLR article 9 does not provide for fees to an objectant’s counsel. (Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98; Alyeska Pipeline Service Co. v Wilderness Society, 421 US 240; #1 Funding Ctr., Inc. v H & G Operating Corp., 48 AD3d 908; Moore v Metropolitan Life Ins. Co., 75 Misc 2d 168, 41 AD2d 601, 33 NY2d 304; People v Finnegan, 85 NY2d 53; Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205; Eaton v New York City Conciliation & Appeals Bd., 56 NY2d 340; Matter of Attorney-General v Northern Am. Life Ins. Co., 91 NY 57; Gerzof v Sweeney, 22 NY2d 297; Matter of Loomis, 273 NY 76.) II. An objectant’s counsel is entitled only to an award of fees where counsel’s actions conferred an actual benefit on the class. (White v Auerbach, 500 F2d 822.)
   OPINION OF THE COURT

Pigott, J.

On this appeal, we are asked to consider whether New York law permits an award of counsel fees and expenses to an object-ant in a class action. We hold that it does not.

This class action lawsuit was brought on behalf of 242 individuals, who were residents at defendant Barnwell Nursing Home and Health Facilities, Inc. at any time from January 1, 1999 through January 31, 2000. The class claim, brought pursuant to Public Health Law § 2801-d, alleged that the nursing home failed to comply with state-imposed standards of patient care.

After nearly six years of litigation, the parties reached a compromise and a motion for approval pursuant to CPLR 908 was made to Supreme Court. Caroline Ahlfors Mouris, on behalf of her mother’s estate, filed objections to the proposed award of fees to class counsel, the compensation established for the settlement administrator, and the incentive award to the class representative. She did not object to the overall settlement amount. Mouris also cross-moved for an award of counsel fees she incurred in preparing and presenting her objections.

Supreme Court approved the proposed settlement, and directed that certain monies be awarded to class counsel for fees and expenses, to the originator of the claim as an incentive award, and to the administrator for past and future services— the remainder to be distributed among the class members in accordance with the approved distribution formula. The court denied Mouris’s objections, as well as her cross motion for counsel fees, noting that her objections had neither assisted the court nor benefitted the class.

The Appellate Division modified by reducing or eliminating each category of Supreme Court’s award (56 AD3d 162 [2008]). As relevant to this appeal, the court held that Mouris was not entitled to an award of counsel fees because CPLR 909 “does not provide for the payment of counsel fees to any . . . party or individual” other than class counsel (id. at 168). The court remitted the matter to Supreme Court to determine the administrator’s fees and expenses. Thereafter, Supreme Court issued a judgment determining such fees and expenses.

This Court granted Mouris leave to appeal from the judgment of Supreme Court to bring up for review the prior nonfinal Appellate Division order. We now affirm.

Under the general rule in New York, attorneys’ fees are deemed incidental to litigation and may not be recovered unless supported by statute, court rule or written agreement of the parties (Hooper Assoc. v AGS Computers, 74 NY2d 487, 491 [1989]). An attorney is not entitled to legal fees from persons other than his or her client merely because such other persons were benefitted by his or her services (Matter of Loomis, 273 NY 76 [1937]). There are certain exceptions to the general rule, including an award of counsel fees for class actions brought on behalf of all members of a class.

Such an award is embodied in CPLR 909, which provides:

“If a judgment in an action maintained as a class action is rendered in favor of the class, the court in its discretion may award attorneys’ fees to the representatives of the class based on the reasonable value of legal services rendered and if justice requires, allow recovery of the amount awarded from the opponent of the class” (emphasis added).

Enacted in 1975, this provision was part of a comprehensive reform of the laws relating to class actions in New York:

“The bill codifies the usual rule that the attorneys for a class that has been successful (through judgment or settlement) are awarded a reasonable attorney’s fee; historically, the prospect of obtaining substantial counsel fees has been an important factor in encouraging the private bar to undertake the class action representation of persons with moderate or modest resources” (Mem to Counsel to Governor from State Consumer Protection Bd, Bill Jacket, L 1975, ch 207 [emphasis added]).

The statute codifies the common-law rule that attorneys’ fees may be paid out of a fund created for the benefit of the class by the litigation. It further empowers the court to order the fees to be paid by the class opponent “if justice requires.”

The language of CPLR 909 permits attorney fee awards only to “the representatives of the class,” and does not authorize an award of counsel fees to any party, individual or counsel, other than class counsel. Had the Legislature intended any party to recover attorney fees it could have expressly said so, as it has in other contexts (see e.g. SCPA 2302 [6] [“In a proceeding to construe a will or after appeal in such a proceeding, pursuant to the direction of the appellate court the court may award to a fiduciary or any party to the proceeding such sum as it deems reasonable for his, her or its counsel fees and other expenses necessarily incurred in the proceeding or on the appeal” (emphasis added)]). Although federal courts have awarded counsel fees to objectors in certain situations under Federal Rules of Civil Procedure rule 23 (h), New York’s statute is only in part modeled on that federal provision (Matter of Colt Indus. Shareholder Litig., 77 NY2d 185, 194 [1991] [noting that CPLR 901-909 have “much in common” with Federal rule 23]).

Mouris argues, and the dissent agrees, that a basis for an award of fees may be recognized under the “common fund” doctrine. However, no modern New York court has applied such rule to authorize an objector’s counsel fee award in a class action lawsuit. The dissent cogently argues that section 909, being in derogation of our common law, should not be read so broadly as to totally eliminate the “common fund” doctrine. However, the Legislature having comprehensively revised CPLR article 9, it is not for this Court to assume a provision it could have easily provided and recognize a doctrine that has not been invoked in the last century. Simply put, although a class may at times benefit from an objectant’s actions, the Legislature did not provide recompense for those efforts.

Accordingly, the judgment of Supreme Court appealed from and the order of the Appellate Division brought up for review should be affirmed, with costs.

Smith, J. (dissenting).

A class action lawyer who recovers

money for the class is, of course, entitled to apply to the court for a fee to be paid out of the class’s recovery. But the majority today holds that a class member’s lawyer who opposes the fee application, even if he does so successfully, must work for free or be paid entirely from the resources of the person who hired him. This result is bad policy; it is contrary to New York’s common law; and it is not required by any statute. I therefore dissent.

Whatever the faults and virtues of the class action device, no one disputes the need to control class counsel’s fees—and nothing furnishes so effective a check on those fees as an objecting lawyer. Even in the many cases where no objection to the fee application is ever filed, the possibility of an objection is one of the few restraints on class counsel’s ambitions. And usually, class counsel can be sure that no one will object to a fee application if a class member does not. The party opposing the class has no incentive to object to a payment that will come out of pockets other than its own; indeed, in the vast majority of class actions that are settled, the party that has settled with the class will be anxious to see the settlement approved without a hitch.

It is true that courts have the duty to scrutinize class counsel’s fee applications, whether objected to or not, but it is hard for them to do so effectively without the help of a lawyer who has an incentive to point out the application’s flaws. Objectors, of course, cannot replace the court or diminish its role. It is the court that must authorize both class counsel’s fee and a successful objector’s; it must do so only where the lawyers have conferred an actual benefit on the class, and then only in proportion to the benefit. But courts that hear an advocate for only one side of the issue are handicapped in making their judgments. Class counsel who submit unopposed fee applications, like most lawyers without adversaries, often get what they ask for.

Today’s decision greatly lessens the likelihood that fee applications submitted by class counsel will ever be opposed. Opposition will be filed only where a lawyer or client is willing to act from philanthropic motives, or in the few cases where a member of the class has a large enough interest in the size of the fee to justify bearing the expense of objecting to it. The problem of excessive fees in these cases is well known (see e.g. Coffee, Class Wars: The Dilemma of the Mass Tort Class Action, 95 Colum L Rev 1343, 1348 [1995]; Hensler, The Globalization of Class Actions: An Overview, 622 Annals of Am Acad of Pol & Soc Sci [No. 1] 7, 19 [2009]). Today’s decision makes it more difficult to cure that problem.

Not only are there excellent reasons to permit fee awards to lawyers who have successfully objected to class counsel’s fees; such awards are supported by the same common-law principles on which class counsel’s applications are based. The common fund rule, going back at least to Trustees v Greenough (105 US 527, 536 [1882]), permits “those who have instituted proceedings for the benefit of a general fund” to receive “proper allowances,” including attorneys’ fees, out of the fund. We adopted this rule in Woodruff v New York, Lake Erie & W. R.R. Co. (129 NY 27, 30-31 [1891]), saying “that one who successfully conducts a litigation . . . for the benefit of a fund, shall be protected in the distribution of such fund for the expenses necessarily incurred by him in the performance of his duty.”

It has long been commonly understood that fees may be awarded both to a class counsel who benefits a class by winning or settling a lawsuit and to an objector’s counsel who benefits the class by reducing the amount of class counsel’s fee. That is a simple corollary of the common fund rule. In each case, those who benefit from the lawyer’s efforts should bear the cost. While there seems to be no New York case directly in point, federal cases decided before the adoption of rule 23 (h) of the Federal Rules of Civil Procedure in 2003 assumed that counsel fees could be awarded to objectors to class action settlements under common fund principles (Frankenstein v McCrory Corp., 425 F Supp 762, 767 [SD NY 1977] [“where the objections filed produced a beneficial effect upon the progress of the litigation, an award of fees is appropriate”]; In re Anchor Sec. Litig., 1991 WL 53651, *1, 1991 US Dist LEXIS 4573, *2 [ED NY 1991] [“attorney’s fees are available to counsel for objectors who make the proper showing”]).

The majority holds, in effect, that New York’s class action statute, adopted in 1975, changed the common law by limiting the scope of the common fund doctrine. The relevant statute is CPLR 909, which says:

“If a judgment in an action maintained as a class action is rendered in favor of the class, the court in its discretion may award attorneys’ fees to the representatives of the class based on the reasonable value of legal services rendered and if justice requires, allow recovery of the amount awarded from the opponent of the class.”

The majority reads “representatives of the class” to mean the named plaintiffs in a class action, an interpretation I assume is correct. It also reads the statute to forbid the awarding of attorneys’ fees to all those who are not “representatives of the class,” an interpretation I think is incorrect.

The majority’s interpretation would be defensible if the Legislature had enacted a systematic codification of the common fund doctrine as it related to class actions, and left objectors’ fees out of that codification. But I see no evidence that the Legislature did anything of the kind. CPLR 909 consists of one sentence. The first half of it does reflect the common fund doctrine in saying that “the court . . . may award attorneys’ fees to the representatives of the class”—no doubt meaning, though it does not say, that it may award them out of the class’s recovery; the thrust of the statute, however, is to extend the court’s power beyond what the common fund doctrine would permit, authorizing “recovery of the amount awarded from the opponent of the class.” I think the authors of the statute would have been surprised at the suggestion that, by briefly restating one conspicuous aspect of the common fund doctrine, they were abolishing the rest of it in the class action context. I see nothing in the background of the statute or its legislative history to suggest an intention to make any such change in the law. And I can think of no reason why the Legislature would have wanted to make that change.

Thus, the majority opinion gives to CPLR 909 the unintended consequence of partially repealing the common fund doctrine and discourages class members from monitoring the inflation of attorneys’ fees. I would not follow that course. I would reverse the Appellate Division’s order and direct Supreme Court to consider the objector’s fee application.

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

Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs.


author: Read, J.

text:
    [938 NE2d 980, 912 NYS2d 547]
    Joseph Moray, Appellant, v Koven & Krause, Esqs., Respondent.
    Argued September 16, 2010;
    decided October 26, 2010

      POINTS OF COUNSEL

      Kathy M. Lynch & Associates, New York City (Ronald Cohen of counsel), for appellant.
    I. The statutory stay under CPLR 321 (c) barred ruling on Koven’s motion. (Carder v Ramos, 163 AD2d 732; Firemen’s Fund Ins. Co. v Dietz, 110 AD2d 1083; Elmhurst Iron Works v Alfieri Gen. Contr. Co., 45 AD2d 971; Wisniewski v Wisniewski, 149 AD2d 965; Maldonado v Law Off. of Mary A. Bjork, 64 AD3d 425; Marte v Graher, 58 AD3d 1.) II. Koven’s failure to serve the notice and demand and the notice of motion failed to invoke the court’s jurisdiction. (Mathews v Eldridge, 424 US 319; Matter of Quinton A., 49 NY2d 328; Matter of MRC Receivables Corp. v Taylor, 57 AD3d 1000; Matter of Gauthier, 59 AD3d 148; Schuck v 7309 Corp., 90 AD2d 828; Marte v Graher, 58 AD3d 1.)

      Steinberg & Cavaliere, LLP, White Plains (Ronald W. Weiner of counsel), for respondent.
    I. The Appellate Division correctly held that the trial court providently exercised its discretion in granting defendant’s motion to dismiss the action. (Brown v Hannaford Bros. Co., 27 AD3d 815; Rodriguez v MC Bldrs., Inc., 18 AD3d 262; Balgley v Cammarata, 299 AD2d 432; Amodeo v Gellert & Quartararo, P.C., 26 AD3d 705; Stout v Heyer, 40 AD3d 743; Manhattan King David Rest, v Nathanson, 269 AJD2d 297; Kel Mgt. Corp. v Rogers & Wells, 64 NY2d 904; A & J Concrete Corp. v Arker, 54 NY2d 870.) II. The Appellate Division properly held that plaintiffs arguments under CPLR 321 (c) were raised for the first time on appeal and not before that court. (Misicki v Caradonna, 12 NY3d 511; Nationwide Ins. Co. v New York Lighter Co., Inc., 68 AD3d 950; Honique Accessories, Ltd. v S.J. Stile Assoc., Ltd., 67 AD3d 481; Lowe’s Home Ctrs., Inc. v Beachy’s Equip. Co., Inc., 49 AD3d 1213; Small Bus. Admin. v Mills, 203 AD2d 654; Telmark, Inc. v Mills, 199 AD2d 579.) III. The trial court was not divested of jurisdiction upon the suspension of plaintiffs attorney. (Lacks v Lacks, 41 NY2d 71; Copeland v Salomon, 56 NY2d 222; Nuernberger v State of New York, 41 NY2d 111; Thrasher v United States Liab. Ins. Co., 19 NY2d 159; Matter of Fry v Village of Tarrytown, 89 NY2d 714; Matter of Adam S., 285 AD2d 175; Freccia v Carullo, 93 AD2d 281.) IV The trial court did not improvidently exercise its discretion when it heard and granted defendant’s motion to dismiss following the suspension of plaintiffs attorney. (Buckeye Retirement Co., LLC, Ltd. v Quattrocchi, 67 AD3d 848; Marte v Graber, 58 AD3d 1; Matter of MRC Receivables Corp. v Taylor, 57 AD3d 1000; Sangiacomo v County of Albany, 302 AD2d 769; Schuck v 7309 Corp., 90 AD2d 828; Hendry v Hilton, 283 App Div 168; Franklin Natl. Bank v Lake Credit Corp., 58 Misc 2d 981; Comptroller of State of N.Y. v Avon Assoc., 58 AD2d 752; Amari v Molloy, 180 Misc 2d 664.)
   OPINION OF THE COURT

Read, J.

On December 31, 2007, plaintiff Joseph Moray commenced this action for legal malpractice, breach of contract and professional negligence against defendant Koven & Krause, Esqs. by filing a summons with notice, which identified Warren Goodman, Esq. as plaintiffs attorney. The summons with notice was apparently served on defendant on February 5, 2008.

On February 25, 2008, defendant served Goodman with a notice of appearance and a demand for a complaint. When the demand did not prompt a response, defendant on April 22, 2008 moved to dismiss the action pursuant to CPLR 3012 (b).

By letter dated May 6, 2008, attorney Preston Leschins informed defendant’s professional liability insurance carrier that his office had been “consulted” by plaintiff “in connection with” plaintiffs claim “with a view towards substituting for” Goodman. The letter characterized Goodman as plaintiffs “former counsel” who was “no longer practicing law.” Leschins asked for “the opportunity to speak with” the carrier about “resolution [of the matter] in an amicable fashion,” and at the carrier’s “earliest convenience.” Plaintiff was copied on this letter.

On May 23, 2008—the motion’s return date—defendant’s counsel had a conversation with Goodman, “who advised that he had been suspended from the practice of law months earlier”; at Goodman’s request, defendant’s counsel agreed to adjourn the motion to dismiss until June 13, 2008. Later that day, he spoke to Leschins, “who confirmed that he had consulted with plaintiff weeks earlier,” but “refused to state whether he would be appearing as attorney for plaintiff’ in the lawsuit.

On or near the adjourned return date, Goodman—indicating that he was mindful that his license had been “suspended on or about January 24, 2008” and was therefore “being careful not to practice law”—submitted a “factual” affidavit in opposition to the motion to dismiss. Styling himself as plaintiffs “former attorney,” Goodman stated that he had “advised [his] former client in writing of [his] situation and told him to get new counsel”; however, he did not say when he did this. Goodman further represented that he “[understood] that [plaintiff had] been diligently pursuing new counsel,” but had “not yet retained a new attorney” and was “still continuing to look for a new lawyer.”

Goodman explained that the summons with notice was served after his suspension because it had been given to the process server beforehand; he annexed to his affidavit a draft complaint that he claimed to have prepared prior to his suspension. The draft complaint alleged that defendant’s predecessor law firm had represented plaintiff “in a lawsuit involving [his] efforts to purchase real property in Yonkers, NY,” which was dismissed pursuant to CPLR 3216 for want of prosecution. Goodman asked the court to deny defendant’s motion “in the interests of justice,” and to grant plaintiff 30 days to finalize the complaint with a new attorney.

On June 19, 2008, Supreme Court granted the motion and dismissed the action for nonservice of the complaint, observing that plaintiff had neither demonstrated a meritorious cause of action nor proffered a reasonable excuse for his default, as was required in order to forestall dismissal under CPLR 3012 (b). The judge noted that plaintiff had neglected to submit an affidavit of merits; further, although plaintiff had “learned from Mr. Goodman on or about the end of January, 2008 of Mr. Goodman’s suspension and plaintiffs need to retain new counsel,” he did not make “any efforts to retain new counsel before the lapsing of the statutory period during which [he] was required to serve his complaint.” Finally, Supreme Court declined to allow plaintiff a brief period of time to retain new counsel on the ground he had already enjoyed a grace period of “approximately five months after his first having been [apprised] by Mr. Goodman of his need to do [this].”

On appeal, plaintiff was represented by counsel. His new attorney invoked CPLR 321 (c), which mandates that

“[i]f an attorney dies, becomes physically or mentally incapacitated, or is removed, suspended or otherwise becomes disabled at any time before judgment, no further proceeding shall be taken in the action against the party for whom he appeared, without leave of the court, until thirty days after notice to appoint another attorney has been served upon that party either personally or in such manner as the court directs.”

On May 12, 2009, the Appellate Division affirmed Supreme Court’s order, concluding that the trial court “did not improvidently exercise its discretion in granting the defendant’s motion to dismiss the action” (62 AD3d 765, 765 [2d Dept 2009]). The court observed that because “plaintiffs contention that the action was stayed pursuant to CPLR 321 (c) [was] raised for the first time on appeal,” it “[was] not properly before [the Appellate Division].” (Id.) We subsequently granted plaintiff permission to appeal, and now reverse.

The command of CPLR 321 (c) is straightforward: if an attorney becomes disabled, “no further proceeding shall be taken in the action against the party for whom he appeared, without leave of the court, until thirty days after notice to appoint another attorney has been served upon that party either personally or in such manner as the court directs” (emphasis added). As the Practice Commentaries explain, CPLR 321 (c) brings about “an automatic stay of the action,” which “goes into effect with respect to the party for whom the [disabled] attorney appeared” (Alexander, Practice Commentaries, McKinney’s Cons Laws of NY, Book 7B, CPLR C321:3, at 183). As a result,

“[d]uring the stay imposed by CPLR 321(c), no proceedings against the party will have any adverse effect. It lies within the power of the other side to bring the stay to an end by serving a notice on the affected party to appoint new counsel within 30 days ... If, at the end of the period, the party has failed to obtain new counsel (or elected to proceed pro se), the proceedings may continue against the party” (id.).

The stay is meant to “afford a litigant, who has, through no act or fault of his own, been deprived of the services of his counsel, a reasonable opportunity to obtain new counsel before further proceedings are taken against him in the action” (Hendry v Hilton, 283 App Div 168, 171 [2d Dept 1953] [discussing Civil Practice Act § 240, the predecessor statute to CPLR 321 (c)]).

This lawsuit was automatically stayed by operation of CPLR 321 (c) on January 24, 2008, the date when plaintiffs attorney was suspended from the practice of law. Defendant never acted to lift the stay by serving a notice upon plaintiff to appoint new counsel within 30 days. Thus, Supreme Court’s order dismissing the action must be vacated (see e.g. Galletta v Siu-Mei Yip, 271 AD2d 486, 486 [2d Dept 2000] [“Since the judgment entered upon the defendants’ default in appearing at trial was obtained without the plaintiffs compliance with CPLR 321 (c), it must be vacated”]; McGregor v McGregor, 212 AD2d 955, 956 [3d Dept 1995] [“The record reveals no compliance with the leave or notice requirements of CPLR 321 (c). The appropriate remedy for a violation of CPLR 321 (c) is vacatur of the judgment”]).

Defendant resists this outcome on two grounds. First, he points out that CPLR 321 (c) permits further proceedings by “leave of the court.” Defendant contends that Supreme Court exercised this “express statutory authority to hear and grant

defendant’s motion to dismiss after [Goodman] was suspended from the practice of law.” The drafter’s notes on CPLR 321 (c), however, state that the words “without leave of the court” were “designed to allow the court to vary the [30-day] rule in cases where the stay of proceedings would produce undue hardship to the opposing party, as where the time to take an appeal or other action would run or where a provisional remedy is sought and speed is essential” (4th Preliminary Rep of Advisory Comm on Prac and Pro, 1960 NY Legis Doc No. 20, at 191). No remotely comparable situation existed at the time Supreme Court dismissed this action. Moreover, Supreme Court did not mention CPLR 321 (c), much less articulate a basis for exercising its discretion to relax the 30-day notice requirement.

Second, defendant argues that plaintiff is foreclosed from bringing up CPLR 321 (c) for the first time on appeal, as the Appellate Division concluded. While we do not as a general rule resolve cases on grounds not raised in the trial court, the context here is unusual. We are dealing with a statute intended to protect litigants faced with the unexpected loss of legal representation. And there is no indication in this record that plaintiff sought to raise CPLR 321 (c) only after having conducted his lawsuit pro se for some period of time after his attorney became disabled (cf. Telmark, Inc. v Mills, 199 AD2d 579, 580-581 [3d Dept 1993]). As a general rule, unrepresented litigants should not be penalized for failing to alert a trial court to the existence of an automatic stay created for the very purpose of safeguarding them against adverse consequences while they are unrepresented. And as the Practice Commentaries point out, all it takes to end the automatic stay is service of a 30-day notice on the affected party.

Accordingly, the order of the Appellate Division should be reversed, with costs, the complaint reinstated, and the case remitted to Supreme Court for further proceedings in accordance with this opinion.

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

Order reversed, etc.

      . As noted previously, the record reveals that Goodman was suspended from the practice of law in late January 2008, but not the date when Goodman advised plaintiff of the suspension, or whether or when plaintiff may have otherwise learned about Goodman’s disability.

      . Plaintiff suggests that Supreme Court “lost jurisdiction” upon Goodman’s suspension; however, the statute says that the disability of a party’s attorney creates an automatic stay—not that it divests the court of jurisdiction.


author: Graffeo, J.

text:
    [938 NE2d 910, 912 NYS2d 477]
    The People of the State of New York, Respondent, v Nathaniel Syville, Appellant. The People of the State of New York, Respondent, v Tony Council, Appellant.
    Argued September 14, 2010;
    decided October 14, 2010

      POINTS OF COUNSEL

      Center for Appellate Litigation, New York City (Abigail Everett and Robert S. Dean of counsel), for appellant in the first above-entitled action.
    The Appellate Division erred when it denied appellant’s corana nobis petition despite conceded facts showing, as a matter of law, that defense counsel’s failure to file a timely notice of appeal fell below constitutional standards. (Evitts v Lucey, 469 US 387; People v Bachert, 69 NY2d 593; Penson v Ohio, 488 US 75; People v O’Bryan, 26 NY2d 95; People v Montgomery, 24 NY2d 130; People v West, 100 NY2d 23; Roe v Flores-Ortega, 528 US 470; Restrepo v Kelly, 178 F3d 634; Castellanos v United States, 26 F3d 717; Strickland v Washington, 466 US 668.)

      Cyrus R. Vance, Jr., District Attorney, New York City (Alan Gadlin and Patrick J. Hynes of counsel), for respondent in the first above-entitled action.
    Under the unusual circumstances of this case, coram nobis relief should be available to defendant so that he can file a late notice of appeal. (Roe v Flores-Ortega, 528 US 470; Evitts v Lucey, 469 US 387; People v Bachert, 69 NY2d 593; People v West, 100 NY2d 23; People v Montgomery, 24 NY2d 130; People v O’Bryan, 26 NY2d 95; Rodriquez v United States, 395 US 327; Canales v Roe, 151 F3d 1226; People v Torres, 179 AD2d 358; People v Harris, 79 NY2d 909.)

      Law Offices of Joel B. Rudin, New York City (Benjamin C. Fishman and Joel B. Rudin of counsel), for appellant in the second above-entitled action.
    The Appellate Division erred in denying coram nobis relief, to which the People consented, for ineffective assistance of appellate counsel, based upon appellant’s undisputed showing that his trial attorney promised, but failed, to file a notice of appeal, and then compounded his negligence by failing to move for an extension of time to file the notice under CPL 460.30. (Penson v Ohio, 488 US 75; Evitts v Lucey, 469 US 387; Griffin v Rlinois, 351 US 12; People v Bachert, 69 NY2d 593; People v Casiano, 67 NY2d 906; People v Gonzalez, 47 NY2d 606; Roe v Flores-Ortega, 528 US 470; Rodriquez v United States, 395 US 327; Peguero v United States, 526 US 23; People v O’Bryan, 26 NY2d 95.)

      Cyrus R. Vance, Jr., District Attorney, New York City (Alan Gadlin and Patrick J. Hynes of counsel), for respondent in the second above-entitled action.
    The statutory requirement that defendant act with due diligence in moving to file a late notice of appeal is entirely consistent with due process, and a defendant cannot avoid the requirement by seeking relief pursuant to coram nobis. Accordingly, this proceeding should be remanded for the First Department to consider whether defendant acted with due diligence in seeking relief from trial counsel’s failure to file a notice of appeal. (Roe v Flores-Ortega, 528 US 470; Evitts v Lucey, 469 US 387; People v Bachert, 69 NY2d 593; People v West, 100 NY2d 23; People v Montgomery, 24 NY2d 130; People v O’Bryan, 26 NY2d 95; Rodriquez v United States, 395 US 327; People v Lampkins, 21 NY2d 138; People v Corso, 40 NY2d 578; People v Callaway, 24 NY2d 127.)
   OPINION OF THE COURT

Graffeo, J.

CPL 460.30 permits the Appellate Division to excuse a defendant’s failure to file a timely notice of appeal from a criminal conviction if the application is made within one year of the date the notice was due. In these cases, we are asked whether the co-ram nobis procedure is available to afford further relief to defendants who did not move within the one-year grace period because they were unaware during that year that their attorneys had not complied with their requests to file notices of appeal.

People v Nathaniel Syville

Nathaniel Syville was tried three times for charges arising from a January 2001 drug transaction that culminated in a shooting incident involving multiple victims. The first trial ended in a mistrial when the jury deadlocked on all charges. At the second trial, Syville was convicted of criminal possession of a weapon in the second degree, acquitted of attempted murder relating to one victim and the jury hung on the remaining attempted murder and assault counts, resulting in a second mistrial as to those offenses. Syville was sentenced on the weapon possession conviction in November 2004 but execution of his sentence was stayed pending resolution of the remaining charges. The third trial again culminated in a mistrial in January 2006 and, the following month, the unresolved charges were dismissed when the People announced that they would not seek a fourth trial. Syville’s attorney filed a notice of appeal relating to the November 2004 conviction in March 2006.

In July 2006, Syville filed a pro se motion for poor person status and other relief, at which time he discovered that the notice of appeal filed by his trial attorney had not been timely under CPL 460.10 (1) (a). That statute required that a notice of appeal be filed within 30 days of the November 2004 sentencing proceeding. CPL 460.30 permits a defendant to seek leave to file a late notice of appeal provided that the application is made within one year of the date the notice should have been filed. In this case, however, the one-year grace period had already elapsed by the time Syville discovered his attorney’s error. Once he learned of the untimely filing, Syville pursued several applications for relief under CPL 460.30 but those requests were denied by the Appellate Division.

Syville subsequently applied for a writ of error coram nobis in the Appellate Division, again seeking permission to file a late notice of appeal. The petition included affidavits from Syville and his former attorney stating that, upon being convicted of the weapon possession offense, Syville had requested that his attorney file a notice of appeal on his behalf. Indeed, the record reflects that Syville’s counsel announced at the sentencing proceeding that he intended to file such a notice. In his affidavit, the attorney explained that he did not file a notice of appeal within 30 days of the November 2004 judgment of conviction under the mistaken belief that it would have been premature to file the notice of appeal while some of the charges remained pending. Furthermore, he had erroneously believed that when the sentencing court stayed the sentence, the 30-day period for filing a notice of appeal was also stayed. Syville contended that he had reasonably relied on his counsel’s advice concerning the proper time for filing a notice of appeal and the failure to timely pursue an appeal was entirely a product of lawyer error.

In the coram nobis application, Syville argued that he should not be penalized for his attorney’s mistake because he had not— and could not reasonably have—discovered the error within the one-year grace period, particularly since he continued to be represented by the same lawyer throughout the relevant time period. Contending that his attorney’s lapse amounted to unconstitutional ineffective assistance of counsel, defendant claimed that it would offend the Due Process Clause to apply the one-year statutory time limit to preclude his pursuit of an appeal. The People consented to coram nobis relief. Noting these unusual circumstances, the People reasoned that Syville should be allowed to perfect his direct appeal in that his failure either to meet the 30-day filing deadline or request relief within the CPL 460.30 (1) one-year grace period stemmed solely from defense counsel’s legal error. Notwithstanding the People’s concession, the Appellate Division denied Syville’s application for coram nobis relief. A Judge of this Court granted Syville leave to appeal (13 NY3d 911 [2009]).

People v Tony Council

After a jury convicted him of conspiracy in the second degree and two counts of criminal sale of a controlled substance in the first degree, Tony Council was sentenced in February 2007, thereby triggering the 30-day period for filing a notice of appeal. Council’s trial attorney did not file a notice of appeal within 30 days of the judgment of conviction.

More than two years later, when Council retained a different lawyer to represent him on appeal, he filed a coram nobis application in the Appellate Division seeking leave to file a late notice of appeal and a reasonable extension of time to perfect the appeal. The application was supported by affidavits from Council, his mother, his trial attorney and his appellate lawyer. Those affidavits revealed that, at the time of his conviction, Council had asked his trial attorney to file a notice of appeal. In fact, Council maintained that his attorney demanded and received payment of $2,000 prior to filing the notice. His trial attorney, who was not retained to perfect the appeal, averred that he had neglected to file the notice of appeal as a result of “law office failure.”

Council remained unrepresented for the next two years. He asserted that he was distracted by health problems and that he had relied on his mother to raise the funds necessary to hire a lawyer to perfect the appeal. During this time, Council claimed that he periodically asked his mother to expedite her efforts out of concern that the time to file an appellate brief might expire. But it appears from the record that Council never contacted the Appellate Division to ascertain the deadline for perfecting his appeal nor pursued poor person relief or assignment of counsel in that court.

In the course of interviewing a prospective appellate attorney in January 2009, Council’s mother discovered that trial counsel had not filed a notice of appeal. At this point in time, both the 30-day period for filing a timely notice of appeal and the CPL 460.30 one-year grace period had long since expired. Eventually, Council hired an appellate lawyer, who filed an application for coram nobis relief in April 2009. In response to that application and the affidavits detailed above, the People submitted a two-paragraph affirmation asserting that, given the trial attorney’s acknowledgment that defendant had timely requested that he file a notice of appeal and that his failure to do so was the result of law office failure, the People did not oppose Council’s request for relief. Despite the People’s lack of opposition, the Appellate Division denied Council coram nobis relief in a brief memorandum opinion, citing CPL 460.30. After Council’s subsequent request for rehearing and reconsideration was denied, a Judge of this Court granted Council leave to appeal (13 NY3d 859 [2009]).

Analysis

The primary issue on appeal is whether a defendant who discovers after the expiration of the CPL 460.30 grace period that a notice of appeal was not timely filed due to ineffective assistance of counsel has recourse through a coram nobis application. Recognizing that the Due Process Clause of the Federal Constitution requires that some avenue for relief be provided in such a circumstance, we conclude that coram nobis is the appropriate procedural course in New York.

We begin with the recognition that there is no federal constitutional mandate that requires states to grant criminal defendants an appeal as of right for review of trial errors (Evitts v Lucey, 469 US 387, 393 [1985]). Thus, “[t]he right to appeal is a statutory right that must be affirmatively exercised and timely asserted” (People v West, 100 NY2d 23, 26 [2003], cert denied 540 US 1019 [2003]). But that being said, where a state has granted a criminal defendant a direct appeal as of right (as does New York), it must “make that appeal more than a meaningless ritual” by affording a right to counsel on appeal (Evitts at 394 [internal quotation marks and citation omitted]). It follows that “[a] first appeal as of right ... is not adjudicated in accord with due process of law if the appellant does not have the effective assistance of an attorney” (id. at 396).

When defense counsel disregards a client’s timely request to file a notice of appeal, the attorney “acts in a manner that is professionally unreasonable” (Roe v Flores-Ortega, 528 US 470, 477 [2000]). In such a situation, a defendant justifiably relies on the lawyer to carry out the purely ministerial task of taking the first step to preserve the right to appellate review (id.). When counsel’s omission causes a defendant to lose the right to perfect or obtain merits consideration of an appeal, the deficient performance amounts to ineffective assistance of counsel in violation of the Due Process Clause (see Evitts, 469 US 387 [1985]; see also Roe, 528 US 470 [2000]). The Due Process Clause prohibits a defendant from being denied the right to appeal as a consequence of the violation of another constitutional right— the right to the effective assistance of counsel on direct appeal (see Evitts, 469 US at 400). Hence, to establish a constitutional violation in this context, a defendant need not identify potentially meritorious issues that would be raised on appeal; the defendant need only demonstrate that, as a result of counsel’s deficient performance, appellate rights were extinguished (Roe at 484-485).

Based on this precedent, we conclude that a defendant must be provided with an opportunity to assert a claim that the right to appeal has been lost due solely to the unconstitutionally deficient performance of counsel in failing to file a timely notice of appeal. The question then becomes what procedural vehicle is available in New York for a defendant to raise this distinct type of ineffective assistance of counsel argument? To resolve this inquiry, we must review the historical use of the writ of error co-ram nobis, the impact of CPL 460.30 on the comm on-law writ and our precedent interpreting that statute.

Even before the United States Supreme Court articulated a constitutional right to effective assistance of counsel on direct appeal, this Court had recognized that a defendant whose right to appeal is lost through his attorney’s deficient performance should have a remedy. Before CPL 460.30 was enacted in 1970, such a claim could be pursued by the filing of an application for a writ of error coram nobis (see People v Callaway, 24 NY2d 127 [1969]; People v Montgomery, 24 NY2d 130 [1969]). This type of application, known as a Montgomery claim, prompted a hearing in the trial court to determine whether the defendant had been reasonably induced to allow the time to take an appeal to expire by reason of an attorney’s misrepresentation that defendant’s appellate rights would be protected. A defendant who prevailed at the hearing was “resentenced” nunc pro tunc—a procedure that restarted the 30-day period for filing a notice of appeal— thereby permitting an appeal on the merits.

The Montgomery claim procedure was largely superceded when the Legislature adopted the modern Criminal Procedure Law in 1970. As we recognized in People v Corso (40 NY2d 578 [1976]), most of the grounds for coram nobis relief previously authorized under the common law were codified in CPL 440.10, a provision that does not encompass Montgomery relief. “CPL 440.10 is designed and delineates the grounds for vacating a judgment of conviction while, on a Montgomery claim, the defendant essentially seeks an extension of time for taking an appeal” (Corso at 580). In limited circumstances, a modified form of Montgomery relief was authorized in CPL 460.30, which allows a defendant whose notice of appeal was not timely filed to apply to the Appellate Division to extend the time for pursuing an appeal. Such relief may be granted if

“the failure to so file or make application in timely fashion resulted from (a) improper conduct of a public servant or improper conduct, death or disability of the defendant’s attorney, or (b) inability of the defendant and his attorney to have communicated, in person or by mail, concerning whether an appeal should be taken” (CPL 460.30 [1]).

The motion “must be made with due diligence after the time for the taking of such appeal has expired, and in any case not more than one year thereafter” (CPL 460.30 [1] [emphasis added]). CPL 460.30 eliminated the need for resentencing as a basis to extend the time for timely filing a notice of appeal, which is consistent with a provision elsewhere in the CPL that precludes a party from challenging the underlying conviction in an appeal from a resentencing (see CPL 450.30 [3], [4]).

In Corso, we noted that CPL 460.30 (1) contains a significant restriction as it imposes a one-year limit for the filing of a motion for leave to file a late notice of appeal. Characterizing the one-year period as jurisdictional in People v Thomas (47 NY2d 37 [1979]), we have previously identified only one exception to the general bar on seeking relief after the expiration of the statutory grace period. We have authorized an appeal despite noncompliance with the CPL 460.30 time limit when, through action or unjustifiable inaction by a prosecutor, defendant’s diligent and good faith efforts to exercise his appellate rights within the one-year time frame were thwarted (id. at 43; People v Johnson, 69 NY2d 339 [1987]).

Today, consistent with the due process mandate, we recognize the need for a second exception. Where an attorney has failed to comply with a timely request for the filing of a notice of appeal and the defendant alleges that the omission could not reasonably have been discovered within the one-year period, the time limit imposed in CPL 460.30 should not categorically bar an appellate court from considering that defendant’s application to pursue an untimely appeal. Turning to the procedure to be used in invoking the exception, we conclude that the common-law writ of error coram nobis affords the appropriate avenue for relief. Since the adoption of the CPL, we have acknowledged that the writ continues to be available to alleviate a constitutional wrong when a defendant has no other procedural recourse (People v Bachert, 69 NY2d 593 [1987]).

“In its modern context a motion for a writ presupposes a violation of the defendant’s constitutional rights not appearing on the record, no negligence which could be attributed to the defendant for failure to have brought the alleged error to the attention of the court at the time of the trial, and further, that the current proceeding is not a substitute for a new trial, appeal or other statutory remedy” (id. at 598 [internal quotation marks and citations omitted]).

Here, each defendant claims that his right to appeal was lost because his attorney failed to comply with the timely request to file a notice of appeal. These alleged constitutional errors do not appear on the trial record and defendants could not have brought these errors to the attention of the trial courts since the omissions did not occur until after the judgments of conviction. Furthermore, the coram nobis proceedings seek only the right to pursue an appeal—they are not a substitute for a new trial, appeal or other statutory remedy. As to the latter, the only statutory recourse appears in CPL 460.30—and that remedy is unavailable because the one-year time limit has expired. Accordingly, a defendant seeking relief under the exception we recognize today may use a coram nobis application filed in the Appellate Division.

We now turn to the specific claims before us. The parties are in agreement that coram nobis provides the appropriate procedural avenue for relief for this category of ineffective assistance of counsel claims. But the People urge us to further hold that, consistent with the requirements of CPL 460.30, defendants who wish to invoke the exception should be required to show that they acted with due diligence to protect their appellate rights, along with demonstrating that they reasonably failed to discover within the one-year grace period that a notice of appeal had not been timely filed. In essence, the People argue that a defendant should be required to establish that his attorney’s omission was the cause of the delay in pursuing relief—in other words, that the delay was not a consequence of the defendant’s unjustifiable failure to timely pursue an appeal. In these cases, the People contend that Syville has established due diligence as a matter of law and is entitled to coram nobis relief but that Council’s application should be remitted to the Appellate Division because resolution of that due diligence inquiry would present a mixed question of law and fact.

Despite the importance of this issue, the People’s due diligence argument is not properly before this Court for review. At the Appellate Division, the People neither asserted that such a standard should be employed nor opposed either defendant’s request for coram nobis relief. And the People never suggested that the loss of appellate rights in these cases was attributable to anything other than deficient performance by trial counsel. As a consequence, we have no occasion to address whether a defendant in this circumstance may be denied relief based on a lack of due diligence in pursuing appellate rights.

In these appeals, the Appellate Division appears to have based its decisions denying relief exclusively on CPL 460.30, suggesting the court believed that the one-year statutory limit barred defendants from pursuing their appeals. Since we now reject that conclusion, and the People failed to preserve for review any other basis for denying relief, both defendants’ coram nobis applications should be granted. We therefore remit each case to the Appellate Division so that defendants may pursue their direct appeals on the merits.

Accordingly, the orders of the Appellate Division should be reversed, defendants’ coram nobis applications should be granted and the cases remitted to the Appellate Division for further proceedings in accordance with this opinion.

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

In each case: Order reversed, etc.

      . The record does not reveal whether this sum represented an unpaid balance relating to the trial representation or a fee associated solely with preparation and filing of the notice of appeal.

      . We expect that it will be the rare case where this exception must be utilized. As defendants here acknowledge, in most cases strict enforcement of the CPL 460.30 time limit is constitutionally permissible because attorneys usually accede to their clients’ requests to file notices of appeal and, when they fail to do so, most defendants are in a position to discover the omission within the statutory grace period.

      . As we observed in Corso, CPL 440.10 provides no statutory avenue for relief for this category of ineffective assistance of counsel claims because it allows defendants to challenge the validity of judgments of conviction—not circumstances that occur post-conviction. If the relief a defendant is seeking is a direct appeal, that relief is not within the cadre of remedies a trial-level court may grant under CPL 440.10. That is not to say that CPL 440.10 is of no utility in this situation because a defendant might secure significant underlying relief in a CPL 440.10 motion. Although a CPL 440.10 motion cannot result in permission to file a late notice of appeal, a defendant can secure the same relief as could be achieved through a successful appeal if the challenge to the conviction fits within one of the permissible claims in CPL 440.10. A defendant is therefore barred from raising a claim in a CPL 440.10 proceeding that could have been raised on direct appeal only if there was an “unjustifiable failure” to raise the issue on direct appeal (see People v Cuadrado, 9 NY3d 362, 365 [2007]). If a defendant was prevented from pursuing his direct appeal solely due to his attorney’s noncompliance with a request to file a notice of appeal, the failure to raise the issue in question on direct appeal would be justifiable (see e.g. People v Lard, 45 AD3d 1331 [4th Dept 2007]).

      . The People also urge that, in the absence of a due diligence requirement, a defendant would be free to turn his attorney’s error into an undue appellate advantage by postponing the coram nobis application and subsequent perfection of the appeal, thereby detrimentally affecting the People’s ability to retry the charges in the event of a reversal. For example, if a defendant learned of his attorney’s error one month after the CPL 460.30 grace period had elapsed but then waited five years to seek coram nobis relief, the People maintain that the Appellate Division should have the discretion to deny the application if defendant failed to proffer a reasonable excuse for the delay.