author: Ciparick, J.

text:
    [945 NE2d 1013, 920 NYS2d 763]
    Fieldston Property Owners Association, Inc., Plaintiff, v Hermitage Insurance Company, Inc., Respondent, and Federal Insurance Company, Sued Herein as Chubb Group of Insurance Companies, Appellant. (Action No. 1.) Hermitage Insurance Company, Inc., Respondent, v Fieldston Property Owners Association, Inc., et al., Defendants, and Federal Insurance Company, Appellant. (Action No. 2.)
    Argued January 11, 2011;
    decided February 24, 2011

      POINTS OF COUNSEL

      Hogan & Hartson LLP (Jonathan A. Constine, of the District of Columbia bar, admitted pro hac vice, of counsel), and Hogan & Hartson LLP, New York City (Katherine M. Bolger and Rachel F. Strom of counsel), for appellant.
    The Appellate Division’s decision is contrary to this Court’s precedent concerning the scope of the duty to defend and the application of policy language. (Raymond Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 5 NY3d 157; Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208; Caporino v Travelers Ins. Co., 62 NY2d 234; Government Empls. Ins. Co. v Kligler, 42 NY2d 863; Nationwide Mut. Ins. Co. v Travelers Ins. Co., 8 AD3d 861; Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169; Town of Massena v Healthcare Underwriters Mut. Ins. Co., 281 AD2d 107, 98 NY2d 435; Hirschhorn v Town of Harrison, 210 AD2d 587; Marshall v Tower Ins. Co. of N.Y., 44 AD3d 1014; B&W Heat Treating Co., Inc. v Hartford Fire Ins. Co., 23 AD3d 1102.)

      Gold, Stewart, Kravatz, Benes & Stone, LLP, Westbury (Jeffrey B. Gold, James F. Stewart and Max W. Gershweir of counsel), for respondent.
    I. The “same risk” rule dictates that the policies’ “other insurance” clauses do not apply to the claims against Fieldston Property Owners Association, Inc., with one possible exception, and thus to that extent, Federal Insurance Company must reimburse Hermitage Insurance Company, Inc., for its equitable share of Fieldston’s defense costs. (Sport Rock Intl., Inc. v American Cas. Co. of Reading, Pa., 65 AD3d 12, 14 NY3d 796; Great N. Ins. Co. v Mount Vernon Fire Ins. Co., 92 NY2d 682; NL Indus., Inc. v Commercial Union Ins. Co., 935 F Supp 513; Pennsylvania Manufacturers’ Assn. Ins. Co. v Liberty Mut. Ins. Co., 39 AD3d 1161; HRH Constr. Corp. v Commercial Underwriters Ins. Co., 11 AD3d 321; State of New York v Blank, 27 F3d 783; Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208; State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369; Cheektowaga Cent. School Dist. v Burlington Ins. Co., 32 AD3d 1265; Soho Plaza Corp. v Nationwide Mut. Ins. Co., 244 AD2d 184.) II. This Court should reject Federal Insurance Company’s improper attempt to argue for the first time that the Hermitage Insurance Company, Inc. policy covers the injurious falsehood claims. (Snyder v Wetzler, 84 NY2d 941; Bingham v New York City Tr. Auth., 99 NY2d 355.)
   OPINION OF THE COURT

Ciparick, J.

This appeal involves two declaratory judgment actions relating to a dispute between two insurers—Hermitage Insurance Company, Inc. (Hermitage) and Federal Insurance Company (Federal)—over their respective responsibility for the cost of defending Fieldston Property Owners Association, Inc. (Fieldston), the insurers’ mutual insured, against two underlying actions. Specifically, we are asked to determine whether the “other insurance” clauses in the two applicable insurance policies require Hermitage to bear the entire defense costs in the two underlying actions against Fieldston. Based on the language of the policies, we conclude that Hermitage had the primary duty to defend Fieldston, to the exclusion of any duty owed by Federal.

I.

Hermitage issued a Commercial General Liability (CGL) policy to Fieldston for the period July 5, 2000 to July 5, 2001. The “per occurrence” CGL policy provides coverage for “bodily injury,” “property damage,” and “personal and advertising injury” as defined in the policy, among other things. The “other insurance” clause of Hermitage’s CGL policy provides, as relevant here:

“If other valid and collectible insurance is available to the insured for a loss we cover . . . our obligations are limited as follows:
“a. Primary Insurance.
“This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described [herein].
“b. Excess Insurance.
“This insurance is excess over [certain types of insurance not relevant here].”

Federal issued an “Association Directors and Officers Liability” (D&O) policy covering the policy period from February 13, 1999 to February 13, 2002. The D&O policy is a “claims made” policy providing coverage for “wrongful acts,” as that term is broadly defined in the policy, committed by the directors and officers of Fieldston. The D&O policy also covers certain enumerated “offenses” committed before or during the policy period. The “other insurance” clause of Federal’s D&O policy provides:

“If any Loss arising from any claim made against the Insured(s) is insured under any other valid policy(ies) prior or current, then this policy shall cover such Loss, subject to its limitations, conditions, provisions, and other terms, only to the extent that the amount of such Loss is in excess of the amount of such other insurance whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the limits provided in this policy.”

“Loss” is defined in Federal’s D&O policy to mean “the total amount which the Insured(s) becomes legally obligated to pay on account of all claims made against it for Wrongful Acts with respect to which coverage hereunder applies, including . . . Defense Costs.”

By letter dated April 20, 2001, nonparty Chapel Farm Estates (Chapel Farm) informed Fieldston that Fieldston’s officers had been making “false statements and fraudulent claims” with respect to Chapel Farm’s “right to access its property from” adjacent public streets. Specifically, Chapel Farm claimed that, in statements “given broad publication to a number of . . . community groups and elected officials,” including statements made at a meeting of the Community Board’s Land Use Committee, Fieldston made false claims as to Chapel Farm’s ability to access certain property over “private streets” purportedly owned by Fieldston for the purpose of a construction project. Chapel Farm thereafter commenced an action against Fieldston and its officers in federal district court asserting several causes of action, including “injurious falsehood,” and seeking damages, among other remedies. Some of the facts and events described in the complaint apparently related to events that occurred during the D&O policy period, but not during the CGL policy period.

By letter dated October 30, 2001, Hermitage demanded that Federal acknowledge its coverage obligations to Fieldston for defense of the Chapel Farm’s federal action. Specifically, Hermitage stated:

“The complaint makes reference to a variety of alleged wrongful acts which are not covered under [the CGL] policy. Seven out of the eight causes of action in the complaint involve allegations that are clearly related to D&O issues and we feel that [Federal] has a primary defense obligation under [its] policy.”

The letter also stated that “it appears that only the cause [of action] for injurious falsehood might trigger a defense obligation under” the CGL policy. Relying on its “other insurance” clause, Federal refused to provide coverage for defense costs. Thereafter, Hermitage agreed to defend Fieldston in the Chapel Farm federal action under a full reservation of its rights.

Shortly after the federal action was dismissed in August 2003, Chapel Farm—by then known as Villanova Estates, Inc. (Villanova)—filed an action in Supreme Court. Although the state action included more causes of action, the operative facts stated therein were nearly identical to the federal action, except that the new complaint included additional, later-occurring events. The eighteenth cause of action set forth an injurious falsehood claim; the remaining causes of action sought declaratory and injunctive relief and damages related to Fieldston’s purported interference with Villanova’s (formerly known as Chapel Farm) property rights, among other things. As with the federal complaint, some of the operative events allegedly occurred when the D&O policy, but not the CGL policy, was in effect.

By letter dated October 24, 2003, Hermitage reserved its right to deny coverage for the Villanova action, specifically advising Fieldston that only the injurious falsehood cause of action was potentially covered. However, Hermitage, once again, agreed to defend Fieldston, subject to a full reservation of its rights, including the right to seek reimbursement from Federal for the cost of the defense. Again relying on its “other insurance” clause, Federal disclaimed coverage, asserting that its coverage for the defense costs of the Villanova action was excess to Hermitage’s policy.

In the state action, Fieldston successfully moved to dismiss certain causes of action, including the injurious falsehood claim. After the partial dismissal of the state action was affirmed on appeal (23 AD3d 160 [1st Dept 2005]), Hermitage demanded that Federal provide a defense as to the remaining causes of action. Federal conceded and assumed the defense of the state action.

These two declaratory judgment actions ensued, seeking to establish the respective defense cost responsibilities of Hermitage and Federal. Fieldston commenced the first action against both insurers to establish their obligation to cover the defense costs of the underlying Chapel Farm federal action. Supreme Court granted Federal’s motion for summary judgment dismissing Hermitage’s cross claims against it and denied Hermitage’s cross motion for summary judgment (2006 NY Slip Op 30541[U]). Supreme Court concluded, in relevant part, that the “other insurance” clauses in the respective policies rendered Hermitage the primary and Federal the excess insurer as to the defense costs of the federal action. Hermitage appealed.

The second declaratory judgment action was brought by Hermitage against Federal seeking reimbursement—in full or on em equitable basis—for the costs incurred in defending the underlying Villanova action. In a separate order, Supreme Court denied Federal’s motion and Hermitage’s cross motion for summary judgment (2007 NY Slip Op 34405[U]). In relevant part, Supreme Court concluded that neither Hermitage nor Federal had demonstrated their respective positions as a matter of law. Hermitage appealed, and Federal cross-appealed, from the second Supreme Court order.

The Appellate Division in the first action reversed, on the law, denied Federal’s motion for summary judgment, granted Hermitage’s cross motion for summary judgment, and declared that Federal is required to reimburse Hermitage for its equitable share of defending the federal Chapel Farm action. In the second action, it modified, on the law, to the extent of granting Hermitage’s cross motion for summary judgment and declaring, that Hermitage is entitled to recover from FederEd its equitable share of defending the Villanova state action, except to the extent that those costs related to the injurious falsehood claims (Fieldston Prop. Owners Assn., Inc. v Hermitage Ins. Co., Inc., 61 AD3d 185 [1st Dept 2009]). The Appellate Division rejected Federal’s argument, reasoning:

“With the possible exception of the injurious falsehood clEdms, all the other losses (including defense costs) that could result from the other causes of action are not insured under the CGL policy but at least some of them are insured under the D&O policy. Accordingly, the ‘other insurance’ clause [in the D&O policy] is inapplicable to the risks of all other such losses, and the D&O policy thus provides primary coverage with respect to some of those risks. In other words, putting aside that possible exception, the CGL and D&O policies do not provide concurrent coverage as they do not insure against the same risks” (id. at 191).

The Appellate Division granted Federal leave to appeal to this Court, certifying the following question: “Was the order of this Court . . . properly made?” We now reverse and answer the certified question in the negative.

II.

In resolving insurance disputes, we first look to the language of the applicable policies (see Raymond Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 5 NY3d 157, 162 [2005]). If the plain language of the policy is determinative, we cannot rewrite the agreement by disregarding that language (see id.). Here, the parties have conceded at least the possibility that both Hermitage’s CGL and Federal’s D&O policies cover the injurious falsehood claims in the two underlying actions. Thus, based on the “other insurance” clauses, Hermitage’s CGL policy is primary to Federal’s D&O policy as they relate to defense costs. The question presented distills to whether the Hermitage policy’s primacy on the injurious falsehood claim triggers a primary duty to defend against the remaining causes of action in the two complaints, thus preempting any obligation by Federal. We say it does.

An insurer’s duty to defend is liberally construed and is broader than the duty to indemnify, “in order to ensure [an] adequate . . . defense of [the] insured,” without regard to the insured’s ultimate likelihood of prevailing on the merits of a claim (General Motors Acceptance Corp. v Nationwide Ins. Co., 4 NY3d 451, 456 [2005]; see also Automobile Ins. Co. of Hartford v Cook, 7 NY3d 131, 137 [2006]). As we have explained on multiple occasions, the insurer’s duty to defend its insured “arises whenever the allegations in a complaint state a cause of action that gives rise to the reasonable possibility of recovery under the policy” (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 65 [1991]; see also BP A.C. Corp. v One Beacon Ins. Group, 8 NY3d 708, 714 [2007]). Moreover, if “ ‘any of the claims against an insured arguably arise from covered events, the insurer is required to defend the entire action’ ” (Town of Massena v Healthcare Underwriters Mut. Ins. Co., 98 NY2d 435, 443 [2002], quoting Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169, 175 [1997] [emphasis added and brackets omitted]). It is “immaterial that the complaint against the insured asserts additional claims which fall outside the policy’s general coverage” (id. at 444 [citation, internal quotation marks and brackets omitted]).

In the context of primary and excess insurance, we have explained that a “primary insurer ‘has the primary duty to defend on behalf of its insureds’ ” (General Motors, 4 NY3d at 455, quoting General Acc. Fire & Life Assur. Corp. v Piazza, 4 NY2d 659, 669 [1958] [brackets omitted]), and it generally has no “ ‘entitlement to contribution from an excess insurer’ ” (id. at 456, quoting Firemen’s Ins. Co. of Washington, D.C. v Federal Ins. Co., 233 AD2d 193 [1st Dept 1996], lv denied 90 NY2d 803 [1997]). Although an excess insurance carrier may elect to participate in an insured’s defense to protect its interest, it has “no obligation to do so” (id.).

As relevant here, Federal’s D&O policy provides that its coverage is excess where “any Loss arising from any claim made against the Insured(s) is insured under any other valid policy (ies).” “Loss” as defined in the D&O policy includes “Defense Costs.” Based on the broad duty to defend, and upon the conceded possibility that Hermitage’s CGL policy covers at least one cause of action in each of the two underlying complaints, Hermitage has a duty to provide a defense to the entirety of both complaints (see e.g. Town of Massena, 98 NY2d at 443-444). Thus, under the terms of Federal’s D&O policy, there does exist “other insurance” which would cover the “loss” arising from the defense of the two underlying actions. Accordingly, Hermitage had an obligation to defend both of the underlying actions without contribution from Federal (see Firemen’s Ins. Co., 233 AD2d at 193; Sport Rock Intl., Inc. v American Cas. Co. of Reading, Pa., 65 AD3d 12, 21 [1st Dept 2009], citing State Farm Fire & Cas. Co. v LiMauro, 65 NY2d 369, 373 [1985]), notwithstanding the fact that Federal would appear to have an obligation to indemnify Fieldston for a greater proportion of the causes of action, if successfully prosecuted.

We acknowledge that the result reached by the Appellate Division has much equitable appeal. If the policies were drafted using different language, we might hold differently, but we may not judicially rewrite the language of the policies at issue here to reach a more equitable result (see e.g. Raymond Corp., 5 NY3d at 162).

Accordingly, the order of the Appellate Division should be reversed, with costs; in action No. 1, the judgment of Supreme Court should be reinstated, in action No. 2, defendant Federal Insurance Company’s motion for summary judgment should be granted, and the certified question should be answered in the negative.

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

Order reversed, etc.

       Federal was apparently improperly originally named as “Chubb Group of Insurance Companies” in the first declaratory judgment action.


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [945 NE2d 495, 920 NYS2d 302]
    The People of the State of New York, Appellant, v Jose Casiano Alonzo, Respondent.
    Argued January 13, 2011;
    decided February 24, 2011

      POINTS OF COUNSEL

      Janet DiFiore, District Attorney, White Plains (Raffaelina Gianfrancesco, Lois Cullen Valerio and Anthony J. Servino of counsel), for appellant.
    Counts two and five of the indictment charging separate and distinct acts of sexual abuse were improperly dismissed as multiplicitous. (People v Keindl, 68 NY2d 410; People v Bauman, 12 NY3d 152; People v Senisi, 196 AD2d 376; People v Brandel, 306 AD2d 860; People v Kindlon, 217 AD2d 793; Blockburger v United States, 284 US 299; People v Watson, 281 AD2d 691; People v Garcia, 13 AD3d 818; People v Moffitt, 20 AD3d 687; People v George, 255 AD2d 881.)

      Legal Aid Society, White Plains (Joana Otaiza and Stephen J. Pittari of counsel), for respondent.
    Counts two and five of the indictment were properly dismissed as multiplicitous because the unit of prosecution for sexual abuse is any touching of the sexual or intimate parts of a person. (People v Senisi, 196 AD2d 376; Missouri v Hunter, 459 US 359; People v Barnes, 64 AD3d 890; People v Aarons, 296 AD2d 508; People v Moffitt, 20 AD3d 687; People v Cruz, 41 AD3d 893; Ball v United States, 470 US 856.)
   OPINION OF THE COURT

Smith, J.

We hold that, where the evidence before a grand jury shows a single, uninterrupted attack in which the attacker gropes several parts of a victim’s body, the attacker may be charged with only one count of sexual abuse.

I

According to the evidence presented to a grand jury, defendant persuaded two women to visit him in the middle of the night at the apartment of a friend of his. After a short stay, the women decided they wanted to leave, but found that the door was locked and defendant had concealed the key. An argument on this subject woke another person in the apartment, who persuaded defendant to open the door.

Defendant followed the women out of the building, grabbed one of them from behind and knocked her to the ground. He pinned her down with his body and groped her breasts and buttocks, while the second woman tried to protect her friend by hitting defendant, pulling his hair and screaming. Defendant responded by throwing the second woman down and getting on top of her in turn, groping her breasts and buttocks also. The first victim then came to the aid of the second, hitting and biting defendant and finally ending the encounter with a kick to the stomach that gave the women a chance to run away.

The grand jury indicted defendant on two counts of unlawful imprisonment and four of sexual abuse. Only the sexual abuse counts concern us here. There are two for each victim, the first alleging forcible hand-to-breast contact, the second hand-to-buttocks. (The second count relating to the second victim uses the word “breast” rather than “buttocks,” but the grand jury transcript shows this to be an error.) Defendant moved to dismiss two of the four counts as multiplicitous. County Court granted his motion, and the Appellate Division affirmed (People v Alonzo, 62 AD3d 720 [2009]). A Judge of this Court granted the People leave to appeal (13 NY3d 936 [2010]), and we now affirm.

II

Prosecutors and grand juries must steer between the evils known as “duplicity” and “multiplicity.” An indictment is duplicitous when a single count charges more than one offense (e.g. People v Bauman, 12 NY3d 152 [2009]; People v Keindl, 68 NY2d 410 [1986]). It is multiplicitous when a single offense is charged in more than one count (e.g. People v Senisi, 196 AD2d 376 [2d Dept 1994]). A duplicitous indictment may fail to give a defendant adequate notice and opportunity to defend; it may impair his ability to assert the protection against double jeopardy in a future case; and it may undermine the requirement of jury unanimity, for if jurors are considering separate crimes in a single count, some may find the defendant guilty of one, and some of the other. If an indictment is multiplicitous it creates the risk that a defendant will be punished for, or stigmatized with a conviction of, more crimes than he actually committed.

There is no infallible formula for deciding how many crimes are committed in a particular sequence of events. In each case, the ultimate question is which result is more consistent with the Legislature’s intention. As a general rule, however, it may be said that where a defendant, in an uninterrupted course of conduct directed at a single victim, violates a single provision of the Penal Law, he commits but a single crime. Thus, a physical attack by one person upon another is normally but one assault, though the attacker may hit the victim several times. A contrary rule would offer a temptation to abuse: Where there were 10 swings of a fist, a prosecutor might obtain 10 convictions growing out of a single incident—and could even seek 10 consecutive sentences, for Penal Law § 70.25 (2) does not require concurrent sentencing for crimes committed through separate acts.

Penal Law § 130.65 (1) says that “[a] person is guilty of sexual abuse in the first degree when he or she subjects another person to sexual contact . . . [b]y forcible compulsion.” “Sexual contact” is defined as “any touching of the sexual or other intimate parts of a person for the purpose of gratifying sexual desire” (Penal Law § 130.00 [3]). Here, to use the words of the Appellate Division in People v Moffitt (20 AD3d 687, 690 [3d Dept 2005]) (quoted by County Court below), there was “but a single, uninterrupted occurrence of forcible compulsion.” It is true, as the People point out, that there were at least two— indeed probably more—occurrences of “sexual contact.” Unsurprisingly, neither victim claimed to remember exactly how often defendant removed his hand and touched her again in the course of groping her, or how often he moved a hand from one body part to another, but it is clear that this happened repeatedly. To hold that each such movement of the hand may be prosecuted as a separate crime would be contrary to common sense.

Thus, the indictment as returned by the grand jury was multiplicitous (accord Woellhaf v People, 105 P3d 209 [Colo 2005]). The People err in suggesting that it would have been duplicitous to include the groping of each victim’s breasts and buttocks in a single count. Neither of our leading cases on duplicity, Keindl and Bauman, involves a single, uninterrupted criminal act. In Keindl, several counts of an indictment were held duplicitous when they alleged separate acts of sodomy or sexual abuse occurring on various occasions over a period of weeks or months (68 NY2d at 419). In Bauman, we held an assault count duplicitous where it alleged 11 incidents over an eight-month period (12 NY3d at 155).

The evidence in this case clearly shows a single crime of sexual abuse against each victim. Other cases may not be so clear. Where the evidence reasonably permits a grand jury to find that either one or two crimes occurred, an indictment charging two should not be dismissed: When the case is tried, the court can reevaluate the evidence and decide how many crimes the trial jury should consider. Here, however, a single count as to each victim is all the grand jury evidence will support.

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

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

Order affirmed.


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

text:
    [945 NE2d 484, 920 NYS2d 291]
    Bleecker Street Tenants Corp., Respondent, v Bleeker Jones LLC et al., Appellants, et al., Defendants.
    Argued January 6, 2011;
    decided February 24, 2011

      POINTS OF COUNSEL

      Kramer Levin Naftalis & Frankel LLP, New York City (Jeffrey L. Braun and Julie M. Weiswasser of counsel), for appellants.
    I. The rule against perpetuities does not apply to options to renew a lease. (Symphony Space v Pergola Props., 88 NY2d 466; Deer Cross Shopping v Stop & Shop Supermarket Co., 2 Misc 3d 401; Warren St. Assoc. v City Hall Tower Corp., 202 AD2d 200; Omath Holding Co. v City of New York, 149 AD2d 179; Burns v City of New York, 213 NY 516; Hoff v Royal Metal Furniture Co., 117 App Div 884, 189 NY 555; DeSantis v Kessler, 83 AD2d 766; Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156; Morrison v Piper, 77 NY2d 165.) II. Even if the rule against perpetuities applies to options to renew a lease, it does not apply to the options in this case. (Symphony Space v Pergola Props., 88 NY2d 466; Kennedy v City of New York, 196 NY 19; 120 Bay St. Realty Corp. v City of New York, 44 NY2d 907; 430 Broome St. Realty Corp. v Bonnouvrier, 17 Misc 3d 1128[A], 2007 NY Slip Op 52182[U]; Morrison v Piper, 77 NY2d 165; Wildenstein & Co. v Wallis, 79 NY2d 641; Hechter v New York Life Ins. Co., 46 NY2d 34.)

      Genoa & Associates, P.C., Old Brookville (Marilyn K. Genoa of counsel), for respondent.
    I. The Appellate Division correctly held that the renewal option contained in the lease violates EPTL 9-1.1 (b). (Symphony Space v Pergola Props., 88 NY2d 466; Recovery Consultants v Shih-Hsieh, 141 AD2d 272; Buffalo

      Seminary v McCarthy, 86 AD2d 435; Warren St. Assoc. v City Hall Tower Corp., 202 AD2d 200; Omath Holding Co. v City of New York, 149 AD2d 179; Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156; Wildenstein & Co. v Wallis, 79 NY2d 641; Bright Homes v Wright, 8 NY2d 157; Matter of Martin v School Bd. of Union Free Dist. No. 28, Long Beach, 301 NY 233; Burns v City of New York, 213 NY 516.) II. The Appellate Division correctly held that the options, which could be exercised after the lease expired, were neither appendant nor appurtenant to the lease. (Symphony Space v Pergola Props., 214 AD2d 66; Warren St. Assoc. v City Hall Tower Corp., 202 AD2d 200; Double C Realty Corp. v Craps, LLC, 58 AD3d 480; Deer Cross Shopping v Stop & Shop Supermarket Co., 2 Misc 3d 401; Inwood Park Apts., Inc. v Coinmach Indus. Co., 6 Misc 3d 246; Kennedy v City of New York, 196 NY 19; 120 Bay St. Realty Corp. v City of New York, 44 NY2d 907; 430 Broome St. Realty Corp. v Bonnouvrier, 17 Misc 3d 1128[A], 2007 NY Slip Op 52182[U]; Morrison v Piper, 77 NY2d 165; Matter of Kellogg, 35 AD2d 145, 28 NY2d 481.)
   OPINION OF THE COURT

Jones, J.

The appeal before this Court presents the novel question whether options to renew a commercial lease are subject to EPTL 9-1.1 (b), New York’s rule against perpetuities. We hold that the rule against perpetuities does not apply to options to renew leases.

Plaintiff Bleecker Street Tenants Corp. is owner of a six-story walkup on Bleecker Street, which was converted to cooperative ownership in September 1983. Plaintiff leased the building’s first-floor commercial space to defendant Bleecker Jones Leasing Company, defendant Bleeker Jones LLC’s predecessor in interest. The lease agreement was contemporaneous with the co-op conversion.

The lease, in relevant parts, provided for an initial lease term of 14 years, with nine consecutive options to renew for a 10-year-period. Each renewal option term was to “commence on the first day of the calendar month immediately following the expiration of the immediate preceding term of this lease.” The lessee could exercise the renewal options together or successively and by giving written notice to the lessor at least six “months prior to the expiration date of each immediately preceding term.” If the lessee did not timely exercise a renewal option and the lessor did not provide notice of the existence of an option within seven months prior to the date of each expiring term, then each renewal option remained in effect until the lessor notified the lessee in writing of its right to exercise each option. The lessee then had 60 days to exercise such renewal option. Lastly, “[i]f the term shall have expired, [Lessee shall remain in possession as a month-to-month tenant until” lessor complied with the notice requirements. The parties agree that, under these provisions, a renewal option could be exercised even after the original lease term had expired, during the month-to-month tenancies resulting from the absence of written notice.

In August 1997, the initial 14-year lease term expired. Defendant Bleeker Jones did not exercise any lease option thereafter. It remained in possession as a month-to-month tenant until plaintiff commenced this action in December 2007, seeking to void the lease renewal options under EPTL 9-1.1 (b) and the common-law rule against unreasonable restraints on alienation. Defendants moved and plaintiff cross-moved for summary judgment.

Supreme Court granted defendants’ motion for summary judgment dismissing the complaint while denying that of plaintiff (2008 NY Slip Op 32263[U]). The court concluded that the renewal options were appurtenant to the lease, exercisable during the lease term and, therefore, valid. The Appellate Division reversed (65 AD3d 240 [2009]), declaring the renewal options clause void under EPTL 9-1.1 (b). The court determined that the lease term had expired prior to any renewal option having been exercised and, thus, concluded that the option could not be appurtenant to the lease. We now reverse.

“No estate in property shall be valid unless it must vest, if at all, not later than twenty-one years after one or more lives in being at the creation of the estate and any period of gestation involved” (EPTL 9-1.1 [b]). This rule—a “prohibition against remote vesting”—codified the American common-law rule (Symphony Space v Pergola Props., 88 NY2d 466, 471, 475 [1996]). Traditionally, the rule sought to limit an owner’s right to control title of property indefinitely, commonly known as a landowner’s dead-hand control (see 88 NY2d at 475; Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156, 160 [1986]). Both in their early and modern forms, rules restricting future dispositions of property were founded on the “principle that it is socially undesirable for property to be inalienable for an unreasonable period of time” (Symphony Space, 88 NY2d at 475). The underlying objective of the rule remains: to protect the alienability of property (see 1965 NY Legis Ann, at 206-207; see also Berg, Long-Term Options and the Rule Against Perpetuities, 37 Cal L Rev 1, 2 [1949]).

“Under the common law, options to purchase land are subject to the rule against remote vesting” (Symphony Space, 88 NY2d at 476; see also Leach, Perpetuities in a Nutshell, 51 Harv L Rev, 638, 660 [1938]). Though scholars proposed that commercial transactions be exempted from the rule against perpetuities, in Symphony Space, the Court held that EPTL 9-1.1 (b) applies to all options to purchase (88 NY2d at 477). An option to purchase land “grants to the holder the power to compel the owner of property to sell it whether the owner is willing to part with ownership or not” (Bruken, 67 NY2d at 163). If the option to purchase does not comply with the rule against perpetuities, that interest could be exercised, or vest, at a time remote to the acquisition of such right. As the Bruken Court noted, the option to purchase in Buffalo Seminary v McCarthy (86 AD2d 435 [4th Dept 1982], affd 58 NY2d 867 [1983]) “granted the holder an unlimited right to buy the owner’s land at any time” (67 NY2d at 163). It is that uncertainty of title which renders the property “inalienable for an unreasonable period of time” (Symphony Space, 88 NY2d at 475). The Symphony Space Court reasoned: “Inasmuch as the common-law prohibition against remote vesting applies to both commercial and noncommercial options, it likewise follows that the Legislature intended EPTL 9-1.1 (b) to apply to commercial purchase options as well” (id. at 478).

The Symphony Space Court also recognized that certain options to purchase land, options appurtenant or appendant to a lease, are not invalid under the rule against perpetuities if the option “originates in one of the lease provisions, is not exercisable after lease expiration, and is incapable of separation from the lease” (id. at 480; see also Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156, 165 [1986]; 3 Simes and Smith, The Law of Future Interests § 1244 [3d ed]). The Court reasoned that such options “encourage the possessory holder to invest in maintaining and developing the property by guaranteeing the option holder the ultimate benefit of any such investment. Options appurtenant thus further the policy objectives underlying the rule against remote vesting and are not contemplated by EPTL 9-1.1 (b)” (Symphony Space, 88 NY2d at 480).

We now turn to whether EPTL 9-1.1 (b) applies to options to renew leases.

Under the common law, “it [was] well settled that perpetual options to renew leases have always been held valid” (Leach, Perpetuities in a Nutshell, 51 Harv L Rev at 662; accord Abbot, Leases and the Rule Against Perpetuities, 27 Yale LJ 878, 883 [1918] [“There seems to be no question . . . that such an option is good”]; Burns v City of New York, 213 NY 516, 520 [1915] [expressly-stated continual lease renewal covenants are valid; it “was the law in England and has been frequently stated by writers and in opinions by the courts both in England and in this country”]; Hoff v Royal Metal Furniture Co., 117 App Div 884, 885 [2d Dept 1907] [concluded that covenants for perpetual renewals “are lawful and in general use”]; see also Perpetual lease or covenant to renew lease perpetually as violation of rule against perpetuities or the suspension of the power of alienation, 3 ALR 498 [1919]; Berg, 37 Cal L Rev at 22) . Thus, because the rule against perpetuities has not applied to options to renew leases under the American common law and EPTL 9-1.1 (b) codifies the American common law, it follows that options to renew leases also fall outside of the scope of EPTL 9-1.1 (b).

Moreover, an option to renew, like a purchase option appurtenant to a lease, furthers the policy goals of the rule against remote vesting. At the same time, lease renewal options or covenants for perpetual lease renewals are wholly distinguishable from purchase options in two respects: an option to renew a lease (1) is exercisable pursuant to the lease agreement and, thus, inherently appurtenant to the lease and (2) lacks the power to divest title of that property to the option holder. It also has been noted that these “covenants” are often part of commercial leases, rendering the lease more attractive and readily alienable than less so (3 Simes and Smith, The Law of Future Interests § 1243 [3d ed]; Berg, 37 Cal L Rev at 23). Thus, lease renewal options appropriately remain valid.

Here, the parties expressly agreed upon nine consecutive renewal options to the 14-year lease term, exercisable according to particular notice requirements. They are not inconsistent with the purpose of the rule against perpetuities because they continue the tenant’s possession of the property without interruption, thus encouraging the efficient use of the property. The dissent argues that excluding renewal options from the rule’s coverage will undermine the purposes of the rule, suggesting the possibility of a former tenant “retaking possession of the . . . property” after its lease has expired (dissenting op at 287). But our holding does not leave open this possibility, for an option exercisable by a former tenant no longer in possession is not a renewal option: it is an option to enter into a new lease. In the present case, it is clear from the lease that, so long as the renewal options existed, the tenant would remain a tenant, lawfully in possession of the property, at least on a month-to-month basis. There is no sound reason of policy to invalidate such a tenant’s option to renew.

Accordingly, the order of the Appellate Division should be reversed, with costs, the motion of defendants Bleeker Jones LLC and Bleecker Jones Leasing Company for summary judgment granted and judgment granted declaring in accordance with the opinion.

Read, J. (concurring).

The majority holds that “the rule against perpetuities does not apply to options to renew leases” (majority op at 274) in New York because “the rule against perpetuities [did] not appl[y] to options to renew leases under the American common law” (id. at 277). But the authorities cited by the majority do not demonstrate that options to renew leases enjoyed a blanket exemption from or were outside the purview of the rule against perpetuities under American common law. Instead, these authorities show that an option to renew did not run afoul of the historic prohibition against remote vesting, subsequently codified in New York as EPTL 9-1.1 (b), if “appurtenant” or “appendant” to the lease, and, in particular, if continuous (a so-called “perpetual” option or covenant to renew). Because the option to renew at issue in this case was appurtenant to the lease (see Symphony Space v Pergola Props., 88 NY2d 466, 478 [1996]), I agree with the result reached by my colleagues in the majority, but I cannot subscribe to their reasoning.

I.

The majority correctly states that the common law enforced “perpetual options to renew leases” (majority op at 277 [first emphasis added; second emphasis in original]). As Professor William Berg, Jr. explains,

“[i]n the early years of the eighteenth century, when the modern Rule against Perpetuities was in its formative stage, the highest court of England rendered a decision in which it held that a lessor’s covenant to renew a twenty-one year lease perpetually was not in violation of the Rule. Thereafter, an almost unbroken line of cases in England and America upheld covenants of that type” (Berg, Long-Term Options and the Rule Against Perpetuities, 37 Cal L Rev 1, 22 [1949] [emphasis added]).

In his view, a perpetual renewal covenant was not properly classified as an exception to the rule, as many experts claimed; rather it was simply “outside [its] province” (id. at 23) because

“under the view that the Rule is designed to destroy indirect restraints upon the practical alienability of property which are brought about by remote non-vested future interests, covenants to renew leases, without time limit, do not suspend the practical power to alienate land. So long as the value of the land does not drop to the point where the rental becomes prohibitive, the lessee always has in himself the legal as well as the practical power to convey that which is substantially a fee simple. On the other hand, when the lease becomes unprofitable, the lessee will give up his right to renew and the lessor will resume complete ownership” (id. [emphasis added]; see also Gray, The Rule against Perpetuities § 230 [4th ed 1942] [regarding perpetual leases as valid because they give lessees estates akin to fees simple defeasible upon conditions subsequent]).

Professor Berg also noted that, for the lessor, a “desire to retain ownership of the land as a good business investment might influence” the granting of a lease with a perpetual covenant; further “[o]n some occasions [the lessor] might be motivated by a sentimental unwillingness to part with the land, but in any event it is difficult to twist the transaction so as to impute . . . the desire to create an inalienable interest” (37 Cal L Rev at 24).

The seminal eighteenth century English case referred to by Professor Berg—Bridges v Hitchcock (5 Bro PC 6, 2 ER 498 [House of Lords 1715])—illustrates what a perpetual option to renew a lease looks like and how such a covenant comports with the policy underlying the rule against perpetuities. In 1693, Stapleton leased a property owned by Bridges known as “Ember Mill,” which had fallen “greatly out of repair” (5 Bro PC at 6, 2 ER at 498). The lease was for 21 years, but provided

“ ‘that if the lessee, his executors, administrators, or assigns, or any of them, should, at any time then-after, before the expiration of the term thereby demised, be minded to renew and take a further lease of the said premises; that then, upon application made, at any time before the last six months of the said term, the appellant, his heirs or assigns, should grant such further lease as should by the lessee, his executors, administrators, or assigns, be desired, without any fine to be demanded therefore, and under the same rents and covenants only as in this lease’ ” (5 Bro PC at 7, 2 ER at 498).

Upon taking possession, Stapleton and his partners set to work rebuilding and improving the property: they tore down the old corn millhouse and erected a brick millhouse in its stead, as well as a millhouse and mills for manufacturing brass and iron and several other buildings. Hitchcock, who by 1714 had acquired the whole interest in the premises from Stapleton and his partners, “reasonably expected to obtain a new lease” (5 Bro PC at 8, 2 ER at 499), but Bridges resisted on various grounds. Defending the investments made in the property, Hitchcock argued that the covenant for perpetual renewal should be enforced by the courts because it was “the only foundation and encouragement which the parties had[ ] for expending so much money upon the premises as they had done” (5 Bro PC at 9, 2 ER at 499). The House of Lords agreed.

Next, the majority also relies on law review articles by Edwin H. Abbot, Jr. and Professor W. Barton Leach to support the proposition that the rule against perpetuities never applied to leases to renew at common law. Abbot hypothesizes “a lease for over 21 years [which] contains a covenant for renewal at the option of the lesseet ] [o]r . . . such a lease contains a covenant for a perpetual series of such renewals” (Abbot, Leases and the Rule Against Perpetuities, 27 Yale LJ 878, 883 [1918]). Contrary to Professor Berg, he then states that “there seems no escape from the conclusion that such an option if sustained . . . form[s] an exception to” the rule against perpetuities; however, he declares, “[t]here seems to be no question . . . that such an option is good. It has been consistently sustained over 200 years in England. The great weight of authority in this country is to the same effect” (id. at 883-884 [emphasis added]). For English common-law authority, Abbot cites Bridges, which, as previously discussed, involved a perpetual covenant to renew.

For American common-law authority, Abbot adverts to several cases, including three from New York: Robinson v Beard (140 NY 107 [1893]), Gomez v Gomez (147 NY 195 [1895]) and Hoff v Royal Metal Furniture Co. (117 App Div 884 [2d Dept 1907], affd 189 NY 555 [1907]). As Judge Graffeo points out in her dissent, however, at the time these three cases were decided, New York had a statutory rather than a common-law rule against perpetuities. This statutory rule was “narrowly” applied and excluded options (dissenting op at 284; see also Symphony Space, 88 NY2d at 478 [“(P)rior to 1965, New York’s narrow statutory rule against remote vesting did not encompass options”], citing Buffalo Seminary v McCarthy, 86 AD2d 435, 443 [4th Dept 1982], affd 58 NY2d 867 [1983]). As a result, New York courts were not called upon to decide whether the rule against perpetuities was an obstacle to enforcing the options to renew in Robinson, Gomez and Hoff. In any event, the options were appurtenant to the leases in each of these cases: Gomez and Robinson involved options for successive terms of a period of years; Hoff, like Bridges, involved a perpetual option to renew.

Similarly, Professor Leach comments that in the United States it was “well settled that perpetual options to renew leases have always been held valid” (Leach, Perpetuities in a Nutshell, 51 Harv L Rev 638, 662 [1938] [first emphasis added; second emphasis in original]; see also Note, Options and the Rule against Perpetuities, 13 U Fla L Rev 214, 220 [1960] [“American jurisdictions today will uniformly protect the option appendant to purchase and the option appendant to renew from the Rule against Perpetuities”]; Camerlo v Howard Johnson Co., 710 F2d 987, 991 [3d Cir 1983] [holding that a perpetual lease option was valid under Pennsylvania law and noting that “(t)he weight of authority elsewhere holds that, absent a statutory prohibition, a perpetual lease or a right to perpetual renewal of a lease does not violate the (rule against perpetuities) or create a restraint on alienation,” citing Abbot, Leases and the Rule Against Perpetuities (27 Yale LJ 878, 883)]). The two cases adduced by the majority—Hoff and Burns v City of New York (213 NY 516 [1915])—both deal with perpetual options to renew a lease.

Finally, the majority opines that “an option to renew a lease ... is exercisable pursuant to the lease agreement and, thus, inherently appurtenant'’ (majority op at 278 [emphasis added]). But there is no reason why an option to renew might not originate in an instrument other than the lease (as was the case with the option to purchase in Symphony Space); or be exercisable after the lease has expired (as was apparently the case in Warren St. Assoc. v City Hall Tower Corp. [202 AD2d 200 (1st Dept 1992), appeal discontinued 84 NY2d 865 (1994)]), or by a former tenant no longer in possession (as hypothesized by Judge Graffeo in her dissent). We have consistently held that “options in real estate are subject to the statutory” rule against perpetuities (Symphony Space, 88 NY2d at 477, citing Wildenstein & Co. v Wallis, 79 NY2d 641, 648 [1992]); and have applied the three-part test in Symphony Space to assess the enforceability of a lease where the holder’s interest may vest beyond the perpetuities period. The reason put forward by the majority to depart from this precedent and create a blanket exception from the rule against perpetuities for all options to renew leases— that they were historically considered to be exempt from or outside the scope of the rule—is simply not supported by the authorities cited.

II.

In Symphony Space, we held that an option is appurtenant to a lease and therefore does not violate the rule against perpetuities when it (1) “originates in one of the lease provisions,” (2) “is not exercisable after lease expiration,” and (3) “is incapable of separation from the lease” (88 NY2d at 480). The only issue that the parties dispute in this case is whether the tenant’s renewal options were exercisable after lease expiration.

The parties agree that, absent notice, the lease provides for month-to-month possession following the initial 14-year term. During this possession, the lease creates asymmetric barriers to terminating the landlord-tenant relationship. The tenant only needs to give a one-month notice before vacating. But the landlord is limited to triggering a 60-day notice period, during which the tenant must choose between exercising a 10-year renewal option or terminating the tenancy. The lease also specifies many other rights and responsibilities during any month-to-month tenancy under the lease. For example, the tenant must maintain insurance covering at least $500,000 in property damage, at the tenant’s expense.

Notably, Symphony Space interprets the rule against perpetuities to prohibit renewal options exercisable after a “lease” expires, not after a “term” in a lease expires. Here, “term” has the meaning ascribed by the lease—i.e., “ ‘term of this lease’ or words of similar import” means “the initial term and any renewal term in respect to which Lessee has exercised its right of renewal”—and makes no mention of monthly terms. Thus, “term” refers to the initial 14-year period and exercised 10-year options.

This definition plays a useful role in the lease. For example, in section 1.3, the lease states that “each renewal option term shall commence on the first day of the calender month immediately following the expiration of the immediate preceding term of this lease” (emphasis added). Because 10-year renewal periods do not begin each month, it is clear that “immediate preceding term” refers only to the initial term and renewal terms—just as the lease defines the word “term.” The parties needed a word or phrase to represent the 14-year and exercised 10-year periods in order to lay their agreement out in a readable contract. There are many examples of this throughout the lease. The drafters did the sensible thing when creating a shorthand phrase for use in a contract: they offered a definition within that same instrument.

The Appellate Division read the relevant language to mean “This Lease only includes the initial 14-year period and exercised 10-year options.” As a result, that court concluded that the option was not appurtenant to the lease because the parties did not expressly state that the lease encompassed the rights and responsibilities that the lease itself obliges after expiration of the initial 14-year term. This was error. Accordingly, like Supreme Court, I would hold the renewal option to be appurtenant to the lease, and would reverse the Appellate Division on that basis.

Graffeo, J. (dissenting).

I write separately because I believe that the majority’s broad rule exempting all options to renew leases from the statutory rule against perpetuities cannot be reconciled with the text of EPTL 9-1.1 (b) and is inconsistent with the analytical framework that we adopted in Symphony Space v Pergola Props. (88 NY2d 466 [1996]).

The rule against perpetuities has been codified in New York since the early 1800s (see id. at 475). It is premised on the belief that “it is socially undesirable for property to be inalienable for an unreasonable period of time” (id.). As a result, the rule’s purpose is “ ‘to ensure the productive use and development of property by its current beneficial owners by simplifying ownership, facilitating exchange and freeing property from unknown or embarrassing impediments to alienability’ ” (id., quoting Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156, 161 [1986]).

The majority correctly observes that, in the early twentieth century, we held that an option to renew a lease was outside the scope of New York’s rule against perpetuities if the lease clearly manifested an intent to create a right to renew in perpetuity (see e.g. Burns v City of New York, 213 NY 516, 520 [1915]; Hoff v Royal Metal Furniture Co., 117 App Div 884 [2d Dept 1907], affd 189 NY 555 [1907]; see generally Leach, Perpetuities in a Nutshell, 51 Harv L Rev 638, 662 [1938]). By the early 1900s, New York had a statutory rule against perpetuities, but it was drafted so narrowly that it covered “only contingent remainders on terms of years and fees limited upon prior fees upon contingencies” (Buffalo Seminary v McCarthy, 86 AD2d 435, 440 [4th Dept 1982], affd 58 NY2d 867 [1983], citing, inter alia, Real Property Law §§ 46, 50, formerly 1 Rev Stat of NY, part II, ch I, tit II, §§ 20, 24 [1st ed]; Matter of Wilcox, 194 NY 288, 298 [1909]). Because an option to renew a lease was not encompassed within these two categories of property interests, the decisions in Burns and Hoff were consistent with the statutes then in effect.

The more widely accepted American common law at that time, in contrast, utilized a broader definition of the rule against perpetuities: “No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest” (Buffalo Seminary, 86 AD2d at 441 n 4 [internal quotation marks omitted]). On its face, the American rule covered all interests in real property, including options and leases. In 1965, the Legislature recognized this principle when it enacted Real Property Law former § 43 with the specific intent “to incorporate the American common-law rules governing perpetuities” and thereby expanded the rule beyond the restrictive reach previously applied (Symphony Space, 88 NY2d at 478).

EPTL 9-1.1 (b) is the current version of New York’s rule against perpetuities. It was enacted in 1966 and similar to its predecessor, the statute provides that “[n]o estate in property shall be valid unless it must vest, if at all, not later than twenty-one years after one or more lives in being at the creation of the estate and any period of gestation involved.” We have determined on several occasions that section 9-1.1 (b) applies to options in real estate (see e.g. Symphony Space, 88 NY2d at 477 [“It is now settled in New York that, generally, EPTL 9-1.1 (b) applies to options”]; Wildenstein & Co. v Wallis, 79 NY2d 641, 648 [1992] [“the rule (is) applicable to options in real estate transactions”]; Buffalo Seminary, 86 AD2d at 442 [“options are within the New York rule”]).

Based on this history, I do not believe that options to renew leases should be categorically exempt from EPTL 9-1.1 (b). The majority reasons that “because the rule against perpetuities has not applied to options to renew leases under the American common law ... it follows that options to renew leases also fall outside of the scope of EPTL 9-1.1 (b)” (majority op at 277). To the contrary, there was no common-law principle in New York— the early twentieth century decisions that the majority relies on were grounded on the absence of a statutory prohibition that applied to perpetual leases (see generally Buffalo Seminary, 86 AD2d at 443). Buffalo Seminary made this very point (see id.).

This Court’s pre-1965 authorities were superceded when the Legislature adopted the American rule that covered all interests in real property and did not contain an exception for an option to renew a lease. Symphony Space, Wildenstein and Buffalo Seminary emphasized that the current statute—EPTL 9-1.1 (b)—applies to all real estate options. As Judge Read observes in her concurrence, the authorities relied on by the majority discuss perpetual lease renewals, which are not at issue in this case. I therefore defer to the language of the statute and this Court’s prior discussions on the applicability of the rule against perpetuities to options on real estate in holding that an option to renew a lease is subject to EPTL 9-1.1 (b).

In Symphony Space, however, we recognized a limited exception to the strict application of the statutory rule against perpetuities for certain “options appurtenant” to a lease. We described an option appurtenant as one that (1) “originates in one of the lease provisions,” (2) “is not exercisable after lease expiration” and (3) “is incapable of separation from the lease” (88 NY2d at 480). An option appurtenant “is valid even though the holder’s interest may vest beyond the perpetuities period” because it “encourage[s] the possessory holder to invest in maintaining and developing the property by guaranteeing the option holder the ultimate benefit of any such investment” and “thus further[s] the policy objectives underlying the rule against remote vesting” (id.). Both courts below correctly employed the option appurtenant exception as the applicable legal principle in this case and other courts that have dealt with options to renew leases have used similar reasoning (see e.g. Double C Realty Corp. v Craps, LLC, 58 AD3d 480 [1st Dept 2009]; Warren St. Assoc. v City Hall Tower Corp., 202 AD2d 200 [1st Dept 1994], appeal withdrawn 84 NY2d 865 [1994]).

There are important reasons why our Court should adhere to this limited exception to EPTL 9-1.1 (b) instead of creating a new category of interests in real property immunized from the rule against perpetuities. First, an option to renew a lease, whether for successive periods of time or in perpetuity, does not have to be contained in the lease itself and may instead be created in a separate written document executed by the parties, perhaps after the lease has commenced or prior to expiration of the lease. If so, it could be drafted so that the ability to exercise the option is independent from the lease and unaffected by the tenant’s nonperformance (see Symphony Space, 88 NY2d at 480). Since this arrangement would not qualify as an option appurtenant under Symphony Space, the majority is incorrect when it states that an option to renew a lease is always “exercisable pursuant to the lease agreement and, thus, inherently appurtenant to the lease” (majority op at 278).

Second, even if an option is set forth in a lease, it could be worded to allow the option to be exercised after the initial term of the lease has expired. This, of course, would provide a disincentive to the property owner to expend money for improvements to the leased space after the expiration of a tenancy since the option holder could wait until improvements were completed before exercising the option and retaking possession of the improved property at the price that was predetermined in the former lease. It would also impose a significant impediment to the owner’s ability to sell the property at a fair market price because the tenant would have the power to resurrect the expired lease (if the required renewal notifications are not issued by the owner), thereby impeding a potential purchaser’s ability to use and develop the property. The rule against perpetuities was designed to deter such barriers to transferability (see Symphony Space, 88 NY2d at 480-481).

These are just examples of the reasons why I believe Symphony Space presciently articulated the limited, three-prong “options appurtenant” exception to EPTL 9-1.1 (b). Applying that test to the facts of this case, the option to renew in the lease at issue violates the statutory rule against perpetuities for the reasons stated by the Appellate Division: the lease expressly provided that it would expire and the tenancy would become month-to-month if the renewal provisions were not exercised before the end of the lease’s term; once that occurred, each month-to-month tenancy did not extend the period of the lease terms (see 120 Bay St. Realty Corp. v City of New York, 44 NY2d 907, 909 [1978]; Kennedy v City of New York, 196 NY 19, 23-24 [1909]); and the option nevertheless permitted the tenant to renew the lease after it had expired. The majority acknowledges this fact, noting the parties’ agreement that the “renewal option could be exercised even after the original lease term had expired” (majority op at 275). Under the Symphony Space test, I conclude that the option is void.

Consequently, I would affirm the order of the Appellate Division.

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

Order reversed, etc.

      . The Legislature “intended to make clear that the American common law rule against perpetuities has been and now is in force in New York” (Mem of Temporary Commission on the Law of Estates, 1965 NY Legis Ann, at 206).

        . Although scholars have questioned whether the validity of such renewal options is excepted or exempted from the rule against perpetuities, they have agreed that those interests are valid, without reservations or limitations (see Abbot, 27 Yale LJ at 884; see also Berg, 37 Cal L Rev at 22). The option to renew “has been consistently sustained for over 200 years in England,” in most cases with “no discussion of the rule . . . Moreover several of the American cases do expressly consider the validity of such covenants under the rule and uphold them none the less. But whether the rule be actually discussed or not, the mere weight of decision seems sufficient to establish the result” (Abbot, 27 Yale LJ at 883-884). Additionally, the concurring and dissenting opinions dispute our reading of the authorities; but neither cites any authority of any kind from any jurisdiction that either says or holds that lease renewal options are subject to the rule against perpetuities.

       All of the cases cited by Abbot from states other than New York involved construction of leases with covenants for perpetual renewal (see Banks v Haskie, 45 Md 207 [1876]; Boyle v Peabody Hgts. Co., 46 Md 623 [1877]; Blackmore v Boardman, 28 Mo 420 [1859]; Diffenderfer v Board of President, etc., of St. Louis Pub. Schools, 120 Mo 447, 25 SW 542 [1894]; Drake v Board

        of Educ. of St. Louis, 208 Mo 540, 106 SW 650 [1907]; Thaw v Gaffney, 75 WVa 229, 83 SE 983 [1914]; see also Garner v Gerrish, 63 NY2d 575, 581 [1984] [remarking that Hoff illustrates that perpetual leases “will not be enforced unless the lease clearly grants to the tenant or his successors the right to extend beyond the initial term by renewing indefinitely”]).

      . Both section 20 of the cited provision of the first Revised Statutes and former section 46 of the Real Property Law stated that
      “[a] contingent remainder shall not be created on a term of years, unless the nature of the contingency on which it is limited, be such that the remainder must vest in interest, during the continuance of not more than two lives in being at the creation of such remainder, or upon the termination thereof.”
      Section 24 of the cited provision of the first Revised Statutes and former section 50 of the Real Property Law applied this standard to the other type of property interest described in Buffalo Seminary.

      . I would also hold that the tenant’s argument premised on EPTL 9-1.3 is meritless.


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

text:
    [946 NE2d 166, 921 NYS2d 178]
    The People of the State of New York, Respondent, v Lamont Beasley, Appellant.
    Argued February 16, 2011;
    decided March 24, 2011

      POINTS OF COUNSEL

      Jeremy Gutman, New York City, for appellant.
    Lamont Beasley’s conviction and sentence should be vacated, and the indictment dismissed, because the People were not ready for trial within the period mandated by CPL 30.30. (People v Berkowitz, 50 NY2d 333; People v Cortes, 80 NY2d 201; People v Stirrup, 91 NY2d 434; People v McKenna, 76 NY2d 59; People v England, 84 NY2d 1; People v Brewer, 63 AD3d 402; People v Liotta, 79 NY2d 841; People v Daniels, 217 AD2d 448; People v Meierdiercks, 68 NY2d 613; People v Anderson, 66 NY2d 529.)

      Charles J. Hynes, District Attorney, Brooklyn (Ann Bordley and Leonard Joblove of counsel), for respondent.
    Defendant’s claim concerning the CPL 30.30 ruling is unpreserved and meritless. (People v Goode, 87 NY2d 1045; People v Luperon, 85 NY2d 71; People v Hawkins, 11 NY3d 484; People v Sinistaj, 67 NY2d 236; People v Osgood, 52 NY2d 37; People v Cortes, 80 NY2d 201; People v Kendzia, 64 NY2d 331; People v Carter, 91 NY2d 795; People v Vaughn, 36 AD3d 434, 552 US 1284; People v Goss, 87 NY2d 792.)
   OPINION OF THE COURT

Ciparick, J.

On May 5, 2005, defendant Lamont Beasley was arraigned on a felony complaint charging him with criminal possession of a controlled substance in the second degree and lesser offenses. The matter was presented to a grand jury and, on May 27, 2005, an indictment was filed and the People announced their readiness for trial. On June 15, 2005, defendant was arraigned on the indictment and Supreme Court adjourned the matter to August 17, 2005, ordering open file discovery and production of the grand jury minutes for inspection pursuant to defendant’s motion to dismiss the indictment. On August 17, 2005, the People failed to produce the grand jury minutes and informed the court that they would produce the minutes “off calendar.” Supreme Court adjourned the proceedings to September 28, 2005. The People provided the grand jury minutes to chambers on August 30, 2005. Supreme Court decided the motion on September 28, 2005.

Subsequent adjournments ensued not relevant to this appeal and, on September 12, 2006, defendant moved pursuant to CPL 30.30 (1) (a) to dismiss the charges on the basis that the People had exceeded the statutory limit of six months (in this case, 184 days) in bringing the matter to trial. The affirmation filed in support of the motion argued inter alia that, “[o]n August 17, 2005, the People represented the grand jury minutes will be provided off calendar and the matter was adjourned to September 28, 2005. The period of August 17, 2005 to September 28, 2005, a total of 42 days, are chargeable to the People.” The People in response argued that, pursuant to CPL 30.30 (4) (a), the 42-day period between August 17, 2005 and September 28, 2005, during which the decision on the sufficiency of the grand jury minutes was still pending, was excludable. Defendant did not file a reply, nor was there oral argument on the motion.

Defendant never argued that the 42-day period should be broken down into smaller periods reflecting the pre and post production of the grand jury minutes. In fact, defendant made no argument at all refuting the People’s contention that the entire period was excludable. Supreme Court denied the motion, charging the People with 173 days of delay, and the matter proceeded to trial. Defendant was convicted of criminal possession of a controlled substance in the second degree and sentenced as a second felony drug offender to 12 years in prison and five years of postrelease supervision.

A divided Appellate Division affirmed the judgment of conviction, finding that the entire 42-day period between August 17, 2005 and September 28, 2005 was excludable (People v Beasley, 69 AD3d 741 [2d Dept 2010]). The dissenting Justices concluded that the 13-day period from August 17, 2005, the date set for open file discovery and production of the grand jury minutes, to August 30, 2005, the date the minutes were actually produced, should be chargeable to the People. The dissent noted that failure to provide grand jury minutes “[is] a direct, and virtually insurmountable, impediment to the trial’s very commencement” (Beasley, 69 AD3d at 747, quoting People v McKenna, 76 NY2d 59, 64 [1990]). Thus the dissenting Justices would have added 13 days to the 173 found by Supreme Court for a total of 186 days, a clear speedy trial violation mandating dismissal of the indictment. A Justice of the Appellate Division granted defendant leave to appeal (14 NY3d 895 [2010]) and we now affirm, on different grounds.

On this appeal, defendant argues, for the very first time, that the People should be charged with the discrete 13-day period between August 17th and August 30th. This argument was not properly preserved at Supreme Court and therefore we cannot review it (see CPL 470.05 [2]).

The procedure for preserving an argument in a CPL 30.30 motion is well established.

“A defendant seeking a speedy trial dismissal pursuant to CPL 30.30 meets his or her initial burden on the motion simply by alleging only that the prosecution failed to declare readiness within the statutorily prescribed time period. However, once the People identify the statutory exclusions on which they intend to rely, the defendant preserves challenges to the People’s reliance on those exclusions for appellate review by identifying any legal or factual impediments to the use of those exclusions” (People v Goode, 87 NY2d 1045, 1047 [1996] [citations, internal quotation marks and brackets omitted]).

Here, defendant met his initial burden. However, once the People set forth the statutory exclusions on which they intended to rely, defendant failed to identify the specific legal and factual impediments to those exclusions, specifically the argument that the People should be charged with the 13 days between August 17th and August 30th for failing to timely provide the grand jury minutes. Because defendant failed to raise this argument before the Supreme Court, he has preserved no question of law for our review (see People v Luperon, 85 NY2d 71, 77 [1995]).

Defendant argues that all the information the trial court required was contained in the People’s affirmation, which stated that the grand jury minutes were not produced until August 30, 2005, and therefore, the trial court had all the information it needed to “remedy the problem and thereby avert reversible error” (id. at 78). This argument is unavailing. Nothing in the People’s affirmation would have alerted the trial court that defendant was claiming that the People should be charged with 13 days of postreadiness delay due to the untimely production of the grand jury minutes. It was defendant’s duty, either in his initial submission or in a reply, to draw the court’s attention to the discrete periods that he now claims should have been chargeable to the People pursuant to CPL 30.30 and to explain why. Not only did defendant fail to highlight the 13-day period, he failed to offer any legal basis for his claim that the entire 42-day period was chargeable as postreadiness delay, or rebut in any way the People’s contention that the 42-day period fell within one of the exemptions.

Defense counsel’s obligation to point out the legal or factual impediments to the People’s arguments is a rule to be “adher[ed] to strict[ly]” (Goode, 87 NY2d at 1047). That the trial court has all the factual information before it is immaterial. “[I]t is defense counsel who is charged with the single-minded, zealous representation of the client and thus, of all the trial participants, it is defense counsel who best knows the argument to be advanced on the client’s behalf’ (People v Hawkins, 11 NY3d 484, 492 [2008] [reviewing claim of legal insufficiency]). Defendant’s failure to preserve his legal argument in Supreme Court precludes any further discussion or consideration of the merits of his claims.

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

Smith, J. (concurring).

I think the preservation here was adequate. Defendant argued that 42 days of time were chargeable to the People because of their failure to furnish the grand jury minutes promptly; that should be read as encompassing an argument that the first 13 days of that time were so chargeable for the exact same reason. It is not fair or realistic to insist that a defense lawyer follow arguments of this kind with a diminuendo sequence (“all three weeks are chargeable to the People, but if not the first two weeks are, and if not that the first week, and if not that the first three days . . .”). This affirmance on preservation grounds will only encourage prosecutors in their already well-established tendency to pounce on every arguable imperfection in a defense lawyer’s argument as a barrier to deciding a case on the merits.

I would reach the merits and would affirm the Appellate Division’s order, essentially for the reasons stated by the Appellate Division majority.

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

Order affirmed.