author: Chief Judge Kaye.

text:
    [ 848 NE2d 1285, 815 NYS2d 908]
    Timothy J. Hinlicky, as Administrator of the Estate of Marie M. Hinlicky, Deceased, and as Executor of William P. Hinlicky, Deceased, Appellant, v David C. Dreyfuss, M.D., et al., Respondents.
    Argued March 28, 2006;
    decided May 2, 2006

      POINTS OF COUNSEL

      Powers & Santola, LLP, Albany (Michael J. Flutter of counsel), for appellant.
    I. The algorithm and table are not admissible per se as evidence of the appropriate standard of care but rather are subject to the admissibility requirements of New York’s evidence rules. (Elliott v City of New York, 95 NY2d 730; Spensieri v Lasky, 94 NY2d 231; Gruntz v Deepdale Gen. Hosp., 163 AD2d 564; Amsler v Verrilli, 119 AD2d 786; Toth v Community Hosp. at Glen Cove, 22 NY2d 255; Fiore v Galang, 64 NY2d 999; Koehler v Schwartz, 48 NY2d 807; McDermott v Manhattan Eye, Ear & Throat Hosp., 15 NY2d 20; Meiselman v Crown Hgts. Hosp., 285 NY 389; Hammer v Rosen, 7 NY2d 376.) II. The algorithm and table were erroneously admitted into evidence since, as offered into evidence and used at trial, they constituted hearsay and fell outside of any recognized hearsay exception. (Spensieri v Lasky, 94 NY2d 231; Foggett v Fischer, 23 App Div 207; Matter of Morfesis v Sobol, 172 AD2d 897, 78 NY2d 856; People v Feldman, 299 NY 153; Mark v Colgate Univ., 53 AD2d 884; Hastings v Chrysler Corp., 273 App Div 292; People v

      Riccardi, 285 NY 21; Hutchinson v Groskin, 927 F2d 722; United States v Tran Trong Cuong, 18 F3d 1132; Liuni v Haubert, 289 AD2d 729.) III. The Cayuga Medical Center form was erroneously admitted into evidence since as offered and used at trial it was irrelevant and constituted hearsay and fell outside of any recognized hearsay exception. (Garthe v Ruppert, 264 NY 290; Guldy v Pyramid Corp., 222 AD2d 815.) IV Reversible error is present which warrants a new trial against all defendants. (Pahl v Troy City Ry. Co., 81 App Div 308; People v Riccardi, 285 NY 21.)

      Sugarman Law Firm, LLP, Syracuse (Timothy J. Perry of counsel), for Riverside Associates in Anesthesia, EC., respondent.
    I. The American Heart Association/American College of Cardiology algorithm was properly received into evidence. (Flah’s, Inc. v Rosette Elec., 155 AD2d 772; Liuni v Haubert, 289 AD2d 729; Borden v Brady, 92 AD2d 983; Brown v County of Albany, 271 AD2d 819; Hornbrook v Peak Resorts, 194 Misc 2d 273; People v Sugden, 35 NY2d 453; Wagman v Bradshaw, 292 AD2d 84; Hambsch v New York City Tr. Auth., 63 NY2d 723; Schou v Whiteley, 9 AD3d 706; Greene v Xerox Corp., 244 AD2d 877.) II. Any error in admission of the algorithm was harmless and does not require a new trial. (Kaskoff v Anderson, 18 AD2d 192, 13 NY2d 911; Spadaccini v Dolan, 63 AD2d 110; Evans v Newark-Wayne Community Hosp., 35 AD2d 1071; Lutwak v United States, 344 US 604; Nestorowich v Ricotta, 97 NY2d 393; Ferrantello v St. Charles Hosp. & Rehabilitation Ctr., 275 AD2d 387; Hartmann v Ten Pin Enters., 252 AD2d 858; Lolik v Big V Supermarkets, 86 NY2d 744; Schifelbine v Foster Wheeler Corp., 4 AD3d 736; Barresi v Kapr, 226 AD2d 1074, 88 NY2d 1005.)

      Aswad & Ingraham, Binghamton (Charles O. Ingraham of counsel), for David C. Dreyfuss, respondent.
    I. The trial court did not abuse its discretion in allowing the algorithm used by one of defendant physicians into evidence. (Spensieri v Lasky, 94 NY2d 231; Flah’s, Inc. v Rosette Elec., 155 AD2d 772; Archer v New York, New Haven & Hartford R.R. Co., 106 NY 589; Liuni v Haubert, 289 AD2d 729; Hambsch v New York City Tr. Auth., 63 NY2d 723; People v Sugden, 35 NY2d 453; Borden v Brady, 92 AD2d 983.) II. The trial court did not abuse its discretion in allowing a form based on the algorithm to be placed in evidence.

      Phelan, Phelan & Danek, LLP, Albany (Timothy S. Brennan and John J. Phelan, III of counsel), for Robert O. Frank, respondent.
    I. Supreme Court did not err in admitting the algorithm. (Spensieri v Lasky, 94 NY2d 231; People v Goldstein, 6 NY3d 119; Toth v Community Hosp. at Glen Cove, 22 NY2d 255; People v Wesley, 83 NY2d 417; Frye v United States, 293 F 1013; Saulpaugh v Krafte, 5 AD3d 934; Zafran v Zafran, 191 Misc 2d 60; Trimarco v Klein, 56 NY2d 98; Texas & Pacific R. Co. v Behymer, 189 US 468; Cassano v Hagstrom, 5 NY2d 643.) II. Supreme Court did not err in allowing a form developed by Cayuga Medical Center, based upon the American Heart Association/American College of Cardiology algorithm, to be admitted into evidence. III. Any error in admitting the algorithm or the Cayuga Medical Center process was harmless.
   OPINION OF THE COURT

Chief Judge Kaye.

In October 1996, decedent Marie Hinlicky, age 71, underwent an endarterectomy to remove plaque buildup in her carotid artery. Though the surgery was completed successfully, she suffered a heart attack and died 25 days later. Plaintiff, as administrator of her estate, brought this medical malpractice action alleging negligence on the part of internist Robert O. Frank, surgeon David C. Dreyfuss and anesthesiologists Riverside Associates.

At the nine-day jury trial 16 witnesses testified: plaintiff and his brother; three nurses and a nonparty doctor who attended to Mrs. Hinlicky at the hospital; the three treating physicians; and seven medical expert witnesses. One question predominated: were defendants negligent in not obtaining a preoperative cardiac evaluation to insure that Mrs. Hinlicky’s heart could tolerate the surgery? Dr. Gregory Ilioff, an anesthesiologist affiliated with Riverside, was the third of her physicians to testify as part of plaintiff’s case-in-chief. During his cross-examination, Dr. Ilioff claimed he had followed a flow chart, or algorithm, in deciding to allow the surgery without the cardiac evaluation. The issue now before us is whether the trial court properly exercised its discretion in admitting the algorithm into evidence. We agree with the Appellate Division that it did.

A summary of the medical testimony which is most pertinent to the issue on appeal follows.

Treating Doctors’ Testimony

Dr. Frank, an internist engaged in family practice, testified that he saw Mrs. Hinlicky approximately once a year starting in September 1984, primarily for treating her high blood pressure. In 1993, she complained of shortness of breath, exhaustion and chest pain, which she believed began after shoveling heavy snow in her driveway. Dr. Frank ordered an electrocardiogram (EKG), which showed a benign condition resulting from her longstanding hypertension; he diagnosed and treated gastritis and gallstones, concluding that her heart was not at risk, and her symptoms improved. In 1995, he ordered a second EKG after she complained of discomfort in her left arm and chest. The result was similar to the earlier test, and Dr. Frank determined that her symptoms were not cardiac in nature. She reported that her symptoms cleared with hot soaks and Tylenol.

In August 1996, during a routine checkup, Mrs. Hinlicky reported that her sister recently had carotid artery surgery and her brother a heart bypass. Based on a physical examination, Dr. Frank testified that he grew concerned that she might have blockages in her carotid arteries, obstructing the blood-flow to her brain, and indeed an ultrasound test showed significant blockages in both. In a follow-up appointment, Dr. Frank concluded that occasional episodes of decreased vision in Mrs. Hinlicky’s right eye were symptoms of a condition associated with the blocked carotid artery and he referred her to the larger, regional hospital for a surgical evaluation.

After his own examination and review of the ultrasound, Dr. Dreyfuss, a vascular surgeon, ordered a third EKG, a chest X-ray, blood tests and an angiogram revealing a 70%-to-75% blockage of the left carotid artery and more mild blockage of the right. He recommended an endarterectomy—an operation he had performed hundreds of times—and explained that without the surgery, she faced the possibility of a stroke. He testified that it was his practice to order invasive cardiology workups on patients who previously had heart attacks, open-heart surgery and episodes of congestive heart failure, but concluded that was unnecessary because Mrs. Hinlicky “had never had a heart attack, she was taking only a mild anti-[hyper]tensive medication, wasn’t taking digoxin or medication to help her heart pump harder, didn’t have . . . congestive heart failure, had a cardiogram that had been stable for a period of three years and didn’t have any active chest pain.” Dr. Dreyfuss did not order a stress test or angioplasty because, he testified, they presented risks that in her case had little likelihood of benefit or changing his prescribed therapy.

Dr. Ilioff, the anesthesiologist, testified that he reviewed Mrs. Hinlicky’s medical history, her chart, the laboratory results, EKGs from 1995 and 1996, and two preoperative nursing assessments, and that he examined and interviewed her. Specifically, he questioned her regarding potential coronary ischemia (lack of blood-flow to the heart) and assigned her a value of “three” on the American Society of Anesthesiologists’ scale for surgery—meaning she had a severe systemic disease which he described as a blockage in the vessel in her neck. He explained that he decided not to send her for a preoperative cardiac evaluation based on the type of surgery involved, her history and her functional capacity.

After testifying at length concerning the steps leading to his decision not to refer Mrs. Hinlicky for preoperative cardiac testing, Dr. Ilioff noted that he had followed a set of clinical guidelines published in 1996 by the American Heart Association (AHA) in association with the American College of Cardiology (ACC). He testified without objection that he incorporated the guidelines into his practice shortly after they were published, because they helped physicians decide “which patient needs to go for a cardiac evaluation . . . and which patient can proceed to the operating room,” and he identified proposed “Exhibit C” as the AHA/ACC “flow diagram that [he] used and continued to use to evaluate patients for pre-operative need for cardiac evaluation.” (Neither of the physician defendants who testified before Dr. Ilioff, in describing the basis for their decision not to refer Mrs. Hinlicky for preoperative cardiac testing, mentioned the algorithm.)

When defense counsel asked Dr. Ilioff for background on the guidelines, plaintiff objected to any testimony that would “involve a discussion of what others have stated or what others have done. That is clearly hearsay.” The trial court speculated as to whether “we need to get into the basis for the program he followed. It would involve other testimony by other experts and perhaps the objection is well founded in that regard.” This colloquy ensued:

“[defense counsel]: And that is true, I believe, your Honor, but inasmuch as Dr. Ilioff has indicated that he utilized these guidelines himself, I believe it would be pertinent at this time to review those with him and that’s what I’m attempting to do, to lay the foundation with respect to those guidelines.
“the court: Well, I think perhaps if he can tell us the prominence of the conclusion they reached rather than going in to what they did to reach the conclusion that would perhaps obviate the hearsay problems.
“[plaintiff’s counsel]: I don’t have any problem if he wants to testify about his practice and how he conducts his practice. But it’s improper to be testifying about what others have stated with respect to any of that.”

After an off-the-record sidebar, Dr. Ilioff testified without further objection that the algorithm was “a flow diagram. And it helps us in a decision making process. Helps us decide what patients to send to the operating room, what patients to send to the cardiologist.” According to the witness, the algorithm was commonly used by anesthesiologists but was also available to surgeons, internists and family physicians, and he would consult it for patients like Mrs. Hinlicky who were at risk for coronary artery disease to determine the need for cardiac evaluation. When defense counsel offered the algorithm into evidence, plaintiff objected on the ground that:

“this is a document taken from some other document. This is a chart taken from some other document. It’s clearly hearsay in nature. And I believe that the witness can testify as to what guidelines he uses, and how he uses them, but to use the chart, I think, is improper. As itself it is hearsay, that’s my objection.
“the court: Well, I think it probably is technically speaking hearsay, but I think it’s a classic case for the use of the professional reliability exception to that rule. It is a document, as I understand it, which does not purport to resolve any crucial issue in the case. It’s to be used only to explain an evaluation procedure [ ] which a treating doctor used, as merely one link in the chain [ ] which he relied upon to reach a conclusion. It is according to the testimony I’ve heard from the witness a material reasonably relied upon by anesthesiologists and others who do pre-operative assessments of a patient who [is] at some risk for coronary artery disease, is that true?
“the witness: That’s correct.
“the court.- I’ll allow it under the professional [re]liability exception to the rule against hearsay.”

Dr. Ilioff then testified that the chart provided a list of variables, the presence or absence of each variable pointing toward surgery or cardiac evaluation. The witness explained that he went through each step of the chart and, based on his assessment of the variables, concluded that there was no need for a cardiac evaluation. He did not consider factors that were not on the chart, because in his opinion, such factors do not “make a difference in the patient’s outcome.”

Plaintiff called three medical experts, and defendants four. While not disputing the reliability of the algorithm, six of the seven expert witnesses clashed over its significance as the standard of care.

Plaintiffs Medical Experts

Plaintiffs cardiology expert maintained that at “mandatory minimum” Mrs. Hinlicky should have had a preoperative stress test. In his view, it was the standard of care to deal with heart problems before undertaking carotid surgery “under all reasonable medical conditions.” On cross-examination, he acknowledged that the algorithm provided a general approach but a decision about treatment additionally requires consideration of the specifics of a patient’s case. The guidelines “were never intended to be the standard of practice because it’s too simplified, it’s a general summary of the general approach.” A vascular surgeon testified that “[t]he literature is abundant and was in 1996 that ruling out a critical coronary lesion or finding . . . [and] correcting it. . . greatly reduces the cardiac risk [in] subsequent vascular surgery.” He opined on cross-examination that guidelines “have some usefulness, but don’t take in to account all risk factors and all clinical situation[s], so every patient has to be individualized, not cookie-cuttered out.” It was not reasonable, in his view, for a surgeon to rely solely on guidelines. Finally, a specialist in anesthesia and pain management agreed that Dr. Ilioff should not have permitted Mrs. Hinlicky to undergo surgery without further cardiac testing. While he was aware of the guidelines, he maintained on cross-examination that they were not published by a recognized anesthesia journal at the time and he had not incorporated them into his practice, as “[guidelines are guidelines.”

Defendants’ Medical Experts

A surgeon called on behalf of Dr. Dreyfuss was president and CEO for medical affairs at Cayuga Medical Center; he testified that he was familiar with the guidelines promulgated in 1996, and that in 1997 a committee at his hospital adapted them as a model for their own surgeons (Exhibit F). Plaintiffs counsel objected on the ground that Exhibit F was created after Mrs. Hinlicky’s death by a different hospital, and might have been based on information that did not exist in 1996. The court nonetheless allowed Exhibit F into evidence, and using it as a guide, the surgeon explained that he would not have ordered a cardiac evaluation. Second, an anesthesiologist testifying for Riverside noted that he and his colleagues were aware of Exhibit C and embraced it as “an important kind of a breakthrough, an important tool for all of us to use ... [a] common language we could use in a way to manage patients in very—both efficient and safe way[s].” Using both Exhibit C and Exhibit F the anesthesiologist concluded that there was no need for a cardiac evaluation. Third, a cardiologist described Exhibit C as “the most logical sequence” to follow in determining when to call in a cardiologist for a preoperative assessment. He opined that a physician relying on the guidelines in 1996 would be “practicing state of the art care.” Finally, an internist and specialist in geriatric medicine testified for Dr. Frank that his referral was appropriate and not a deviation from the standard of care; the witness was asked no questions about the guidelines.

Prior to charging the jury on the law, the trial court summarized the parties’ positions:

“The plaintiffs position and contention is that [a cardiac evaluation] referral was required by the standards of care prevailing in 1996, given Marie Hinlicky’s physical condition and history. The defendants contend that the 1996 guidelines adopted by the American Heart Association and the College of Cardiology were the standards of care in 1996 and were followed by the defendants in their care and treatment of Marie Hinlicky. And that, in accordance with the guidelines and their findings, a judgment was reached that no such referral was warranted.”

Only counsel for Dr. Frank raised an objection to the court’s instruction, eschewing reliance on the guidelines. Asked to determine whether each defendant was negligent for failing to secure a preoperative cardiac clearance, the jury unanimously found for defendants. The Appellate Division unanimously affirmed, holding that the trial court properly admitted the algorithm into evidence because it was offered not for its truth, and “not to establish a per se standard of care but for the non-hearsay purpose of illustrating a physician’s decision-making methodology” (18 AD3d 18, 21 [3d Dept 2005]). We now affirm.

Discussion

Plaintiff urges that the admission of the algorithm into evidence was reversible error entitling him to a new trial. Like the Appellate Division, we conclude that in this case the algorithm was correctly admitted during Dr. Ilioff s testimony as demonstrative evidence of the steps he had followed in clearing Mrs. Hinlicky for surgery.

In New York, scientific works generally are excluded as hearsay when offered for their truth (see People v Riccardi, 285 NY 21 [1941]). For well over a decade, commentators have debated whether clinical practice guidelines such as those engendering the algorithm should be admissible for their “truth” as evidence of the standard of care (see e.g., Mello, Of Swords and Shields: The Role of Clinical Practice Guidelines in Medical Malpractice Litigation, 149 U Pa L Rev 645 [2001]; Williams, Evidence-Based Medicine in the Law Beyond Clinical Practice Guidelines: What Effect Will EBM Have on the Standard of Care?, 61 Wash & Lee L Rev 479 [2004]).

While it is true that the algorithm is an extrajudicial statement, it would only be “classic” hearsay if offered to prove the truth of the matter asserted therein. Defense counsel, in cross-examining his client, sought to admit the algorithm on the ground that “as Dr. Ilioff has indicated that he utilized these guidelines himself, I believe it would be pertinent at this time to review those with him and that’s what I’m attempting to do, to lay the foundation with respect to those guidelines.” The witness testified that he used a “flow diagram” as an aid to determine which patients would be likely to benefit from a cardiac workup before surgery and which would not. He explained that “it helps us in a decision making process. Helps us decide what patients to send to the operating room, what patients to send to the cardiologist.” Without objection, he testified that the process he used was consistent with a set of “clinical guidelines” recommended by the AHA and the ACC, that the “flow diagram” had been published prior to the surgery and that he had incorporated the process into his practice.

Thus, counsel offered the algorithm as a demonstrative aid for the jury in understanding the process his client had followed. Indeed, the trial court stated that it was admitting the algorithm to illustrate Dr. Ilioff s evaluation process:

“It is a document, as I understand it, which does not purport to resolve any crucial issue in the case. It’s to be used only to explain an evaluation procedure [ ] which a treating doctor used, as merely one link in the chain [ ] which he relied upon to reach a conclusion.”

Before us, plaintiff now argues that the most troubling aspect of this approach is that there was no meaningful distinction between offering the algorithm to prove its truth, and offering it to illustrate the decision-making process of a party who stated that he adopted it in his practice. It may be that jurors could draw unsupported inferences from demonstrative evidence excerpted from clinical practice guidelines and reproduced as an exhibit. Here, however, the treating physician, a fact witness, testified about his own use of Exhibit C (see Kaye et al., The New Wigmore: Expert Evidence § 4.5, at 148 [2004]) and plaintiff never requested a limiting instruction.

We reject plaintiff’s contention that Spensieri v Lasky (94 NY2d 231 [1999]) mandates a different conclusion. In that case, the plaintiff sought to introduce the Physicians’ Desk Reference (PDR) by itself to establish the standard of care. This Court rejected the contention that the PDR constituted prima facie evidence of a standard of care, observing that the PDR could have some significance in identifying a doctor’s standard of care, but it could not be determinative. We reasoned that material in the PDR should be analyzed only in the context of a patient’s medical condition, and thus expert testimony would be needed to interpret whether the treatment in question presented an acceptable risk for the patient. We concluded that the plaintiff was not barred from offering expert testimony partially based on reliance on the PDR; rather, she was prohibited from offering excerpts from the PDR as “stand alone proof” of a standard of care (id. at 239). In this case, of course, the algorithm was not admitted “by itself’ to establish a standard of care, but was admitted to explain “one link in the chain” of Dr. Ilioffs evaluation process.

Once admitted for demonstrative purposes, however, clinical practice guidelines may raise the question whether, and in what way, courts should circumscribe their use substantively by medical experts. Indeed, here, experts on both sides were invited to opine on the algorithm’s significance. Plaintiff’s first expert acknowledged on cross-examination that the algorithm provided a general approach in the decision-making process, but that, in addition to the steps in the algorithm, a decision about treatment must be made by considering the specifics of the individual patient’s case, such as the risks to the patient, the EKG, and the type of surgery to be performed. He also testified that he did not disagree with the guidelines so long as they were not utilized as a rule to be applied to all patients. Had plaintiff been concerned that the purpose for admitting the algorithm was changing from demonstrative to substantive evidence, he surely could and should have said so.

Defendants additionally maintain that the algorithm was properly admitted under the professional reliability exception to the hearsay rule, which enables an expert witness to provide opinion evidence based on otherwise inadmissible hearsay, provided it is demonstrated to be the type of material commonly relied on in the profession (see e.g., Hambsch v New York City Tr. Auth., 63 NY2d 723, 726 [1984]; see also Prince, Richardson on Evidence § 7-311 [Farrell 11th ed]). Because the trial court’s proper basis for admitting the algorithm was demonstrative and plaintiff made no request for clarification or limiting instructions, we need not reach this issue. We note only that whether evidence may become admissible solely because of its use as a basis for expert testimony remains an open question in New York (see People v Goldstein, 6 NY3d 119, 126-127 [2005] [concerning out-of-court factual statements]). While some jurisdictions allow otherwise inadmissible materials relied upon by an expert witness to reach the jury for nonhearsay purposes, we have acknowledged the need for limits on admitting the basis of an expert’s opinion to avoid providing a “conduit for hearsay” (id. at 126). Absent timely objection by plaintiff, however, we need not decide whether in this instance the trial court applied proper limits in allowing the algorithm to be viewed by the jury to evaluate the experts’ opinions or for some other nonhearsay purpose.

Finally, plaintiff contends that the court erred in admitting Exhibit F during the testimony of a defense expert. Plaintiff timely objected to the chart on the ground that it was created a year after Mrs. Hinlicky’s death by a different hospital, and might have been based on information that did not exist in 1996. Though admission of the chart may have been error on relevancy grounds, we conclude that such error was harmless.

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

Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith concur.

Order affirmed, with costs.

      . Plaintiff, Mrs. Hinlicky’s son, is acting in his capacity as both the administrator of her estate and as executor of the estate of his father, William E Hinlicky, who died during the course of this litigation.

      . “One” signified a normal patient without any medical problems, “six” a patient who was brain-dead and presenting for an organ transplant.

      . The court permitted defense counsel to use another document (Exhibit E)—a table defining high, intermediate and low surgical risks—as part of his examination of Dr. Ilioff on the theory that the table was incorporated into the algorithm. References to the algorithm include the table.

      . Clinical practice guidelines have been defined variously as “systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances,” and as “standardized specifications for care, either for using a procedure or for managing a particular clinical problem” (Rosoff, The Role of Clinical Practice Guidelines in Health Care Reform, 5 Health Matrix 369, 370 [1995]).

      . Courts have set some parameters for the use of clinical practice guidelines in medical malpractice cases. For example, in Diaz v New York

        Downtown Hosp. (99 NY2d 542, 545 [2002]), we rejected the use of clinical practice guidelines by plaintiffs expert to prove an accepted practice where the authoring body explicitly stated the guidelines were “not rules” and the expert failed to set forth a factual basis for her reliance on them. In Levine v Rosen (532 Pa 512, 520, 616 A2d 623, 628 [1992]), the Pennsylvania Supreme Court noted approvingly that the parties introduced conflicting recommendations of the American Cancer Society and the American College of Obstetricans and Gynecologists, and viewed the guidelines as “[unquestionably” establishing that two schools of thought existed in the medical community on a relevant issue. (See also Frakes v Cardiology Consultants, P.C., 1997 WL 536949, 1997 Tenn App LEXIS 597 [1997] [Koch, Jr., J, concurring] [noting that clinical practice guidelines have emerged as a response by the medical profession to perceived shortcomings in medical practice, and that such guidelines can materially assist jurors when properly authenticated, though they should not necessarily be viewed as conclusive evidence of the standard of care].)

      . For example, rule 703 of the Federal Rules of Evidence (“Bases of Opinion Testimony by Experts”) permits admission of “[f]acts or data that are otherwise inadmissible” when in its discretion the court determines the material has probative value in aiding the jury in evaluating the expert’s opinion, substantially outweighing prejudicial effect.


source: Caselaw Access Project

author: Rosenblatt, J.

license: Public Domain

text:
    [ 849 NE2d 262, 816 NYS2d 403]
    In the Matter of Jacob Heller, Deceased. Sandra Davis, as Attorney-in-Fact for Bertha M. Heller, Appellant; Herbert M. Miller et al., Respondents.
    Argued March 22, 2006;
    decided May 4, 2006

      POINTS OF COUNSEL

      Greenfield Stein & Senior, LLP, New York City (Gary B. Freidman and. Jeffery H. Sheetz of counsel), for appellant. I.
    The rule against fiduciary self-dealing is one of the most deeply ingrained principles of our common law; the Appellate Division’s construction of the Legislature’s silence on this issue as approval of such conduct is unsupported by the legislative history, contrary to established canons of statutory construction, and undermines the rule against undivided loyalty to which this Court has adhered for over 100 years. (Meinhard v Salmon, 249 NY 458; Wendt v Fischer, 243 NY 439; Munson v Syracuse, Geneva & Corning R.R. Co., 103 NY 58; Dutton v Willner, 52 NY 312; City Bank Farmers Trust Co. v Cannon, 291 NY 125; Matter of Durston, 297 NY 64; Birnbaum v Birnbaum, 73 NY2d 461; Matter of Ryan, 291 NY 376; Transit Commn. v Long Is. R.R. Co., 253 NY 345; Fitzgerald v Quann, 109 NY 441.) II. The Surrogate’s Court properly determined that the trustees could not elect uni-trust retroactive to January 1, 2002.

      Thacker Proffitt & Wood LLP, White Plains (Kevin J. Plunkett, Darius P. Chafizadeh and Stefanie A. Bashar of counsel), and Greenberg Traurig, LLP, New York City (Linda B. Hirschson of counsel), for respondents.
    I. The unitrust election is proper. (Andre v Pomeroy, 35 NY2d 361; Menzel v Plotnick, 202 AD2d 558; Nicklas v Tedien Realty Corp., 305 AD2d 385; Strychalski v Mekus, 54 AD2d 1068; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Way v Grantling, 289 AD2d 790; People v White, 73 NY2d 468; Doctors Council v New York City Employees’ Retirement Sys., 71 NY2d 669; Riley v County of Broome, 95 NY2d 455; Matter of Sutka v Conners, 73 NY2d 395.) II. The trustees correctly elected into the unitrust regime effective January 1, 2002. (Matter of 1605 Book Ctr. v Tax Appeals Trib. of State of N.Y., 83 NY2d 240; Matter of Elgut v County of Suffolk, 1 AD3d 512; Matter of Theroux v Reilly, 1 NY3d 232; Castro v United Container Mach. Group, 96 NY2d 398; People v Giordano, 87 NY2d 441; Sanders v Winship, 57 NY2d 391; Matter of Branford House v Michetti, 81 NY2d 681; Matter of Washington Post Co. v New York State Ins. Dept., 61 NY2d 557.)
   OPINION OF THE COURT

Rosenblatt, J.

In September 2001, New York enacted legislation that transformed the definition and treatment of trust accounting income. The Uniform Principal and Income Act (EPTL art 11-A) and related statutes (L 2001, ch 243), including the optional unitrust provision (EPTL 11-2.4), are designed to facilitate investment for total return on a portfolio. The appeal before us centers on the optional unitrust provision, which permits trustees to elect a regime in which income is calculated according to a fixed formula and based on the net fair market value of the trust assets. We hold that a trustee’s status as a remainder beneficiary does not in itself invalidate a unitrust election made by that trustee, and that a trustee may elect unitrust status retroactively to January 1, 2002, the effective date of EPTL 11-2.4.

I.

In his will, after making certain other gifts of personal property and money, Jacob Heller created a trust to benefit his wife Bertha Heller (should she survive him) and his children. Heller provided that his entire residuary estate be held in trust during Bertha’s life. He appointed his brother Frank Heller as trustee and designated his sons Herbert and Alan Heller as trustees on Frank’s death. Every year Bertha was to receive the greater of $40,000 or the total income of the trust. Heller named his daughters (Suzanne Heller and Faith Willinger, each with a 30% share) and his sons and prospective trustees (Herbert and Alan Heller, each with a 20% share) as remainder beneficiaries.

Jacob Heller died in 1986, and his wife Bertha survives him. When Heller’s brother Frank died in 1997, Herbert and Alan Heller became trustees. From that year until 2001, Bertha Heller received an average annual income from the trust of approximately $190,000. In March 2003, the trustees elected to have the unitrust provision apply, pursuant to EPTL 11-2.4 (e) (1) (B) (I). As required by EPTL 11-2.4 (e) (1) (B) (III), they notified trust beneficiaries Bertha Heller, Suzanne Heller and Faith Willinger. The trustees sought to have unitrust treatment applied retroactively to January 1, 2002, the effective date of EPTL 11-2.4. As a result of that election, Bertha Heller’s annual income was reduced to approximately $70,000.

Appellant Sandra Davis commenced this proceeding, as attorney-in-fact for her mother Bertha Heller, and on August 1, 2003 moved for summary judgment, seeking, among other things, an order annulling the unitrust election and revoking the letters of trusteeship issued to Herbert and Alan Heller. She also sought a determination that the election could not be made retroactive to January 1, 2002. Surrogate’s Court granted the branch of her summary judgment motion that sought to void the trustees’ retroactive application of the unitrust election, but denied the branches of her motion seeking annulment of the unitrust election itself and other relief.

Davis appealed Surrogate’s Court’s order, and Herbert and Alan Heller cross-appealed. The Appellate Division affirmed the order to the extent that it denied Davis’s summary judgment motion and reversed so much of the order as annulled the retroactive application of the unitrust election. It also granted leave to appeal and certified the following question to us: “Was the opinion and order of [the Appellate Division] dated August 15, 2005, properly made?” We conclude that it was and now affirm.

II.

The 2001 legislation that forms the subject of this appeal was designed to make it easier for trustees to comply with the demands of the Prudent Investor Act of 1994. In addition to enacting EPTL article 11-A (Uniform Principal and Income Act), the Legislature both added EPTL 11-2.3 (b) (5) to the Prudent Investor Act and included the optional unitrust provision, EPTL 11-2.4.

Under the former Principal and Income Act (EPTL 11-2.1), a trustee was required to balance the interests of the income beneficiary against those of the remainder beneficiary (see EPTL 11-2.1 [a] [1]), and was constrained in making investments by the act’s narrow definitions of income and principal (see EPTL 11-2.1 [b]). A trustee who invested in nonappreciating assets would ensure reasonable income for any income beneficiary, but would sacrifice growth opportunities for the trust funds, as inflation eroded their value; if the trustee invested for growth, remainder beneficiaries would enjoy an increase in the value of the trust at the expense of income beneficiaries. Moreover, the need to invest so as to produce what the former Principal and Income Act defined as income led to investment returns that failed to represent the benefits envisaged as appropriate by settlors.

The Prudent Investor Act encourages investing for total return on a portfolio. Unless the governing instrument expressly provides otherwise, the act requires that trustees “pursue an overall investment strategy to enable the trustee to make appropriate present and future distributions to or for the benefit of the beneficiaries under the governing instrument, in accordance with risk and return objectives reasonably suited to the entire portfolio” (EPTL 11-2.3 [b] [3] [A] [emphasis added]).

The 2001 legislation allows trustees to pursue this strategy uninhibited by a constrained concept of trust accounting income. First, the Prudent Investor Act now authorizes trustees

“to adjust between principal and income to the extent the trustee considers advisable to enable the trustee to make appropriate present and future distributions in accordance with clause (b) (3) (A) if the trustee determines, after applying the rules in article 11-A, that such an adjustment would be fair and reasonable to all of the beneficiaries, so that current beneficiaries may be given such use of the trust property as is consistent with preservation of its value” (EPTL 11-2.3 [b] [5] [A]).

A trustee investing for a portfolio’s total return under the Prudent Investor Act may now adjust principal and income to compensate for the effects of the investment decisions on distribution to income beneficiaries (see 14 Warren’s Heaton, Surrogates’ Courts, at App 5-25—5-27). Alternatively, the optional unitrust provision lets trustees elect unitrust status for a trust (EPTL 11-2.4), by which income is calculated according to a fixed formula.

In a unitrust pursuant to EPTL 11-2.4, an income beneficiary receives an annual income distribution of “four percent of the net fair market values of the assets held in the trust on the first business day of the current valuation year” (EPTL 11-2.4 [b] [1]), for the first three years of unitrust treatment. This is true regardless of the actual income earned by the trust. Starting in the fourth year, the value of the trust assets is determined by calculating the average of three figures: the net fair market value on the first business day of the current valuation year and the net fair market values on the first business days of the prior two valuation years (see EPTL 11-2.4 [b] [2]). Income generated in excess of this amount is applied to principal.

Under the 2001 legislation, then, a trustee may invest in assets, such as equities, that outperform other types of investment in the long term but produce relatively low dividend yields for an income beneficiary, and still achieve impartial treatment of income and remainder beneficiaries. The trustee may accomplish this either by adjusting as between principal and income (see 14 Warren’s Heaton, Surrogates’ Courts, at App 5-25—5-27) or by electing unitrust status with the result that the income increases in proportion to the value of the principal (id. at App 5-14). If a trust’s assets are primarily interests in nonappreciating investments producing high yields for income beneficiaries, a unitrust election may initially result in a substantial decrease in the distribution to any income beneficiary, at least until the portfolio is diversified. This case presents such a scenario.

III.

Davis argues that the trustees are barred as a matter of law from electing unitrust status because they are themselves remainder beneficiaries, and that, in any case, they may not elect unitrust status retroactively to January 1, 2002. The Appellate Division held that the legislation does not impede uni-trust election by an interested trustee, that such an election is not inconsistent, per se, with common-law limitations on the conduct of fiduciaries and that the statute permits trustees to select retroactive application. We agree.

EPTL 11-2.3 (b) (5), the 2001 statute that gives trustees the power to adjust between principal and income, expressly prohibits a trustee from exercising this power if “the trustee is a current beneficiary or a presumptive remainderman of the trust” (EPTL 11-2.3 [b] [5] [C] [vii]) or if “the adjustment would benefit the trustee directly or indirectly” (EPTL 11-2.3 [b] [5] [C] [viii]). Tellingly, the Legislature included no such prohibition in the simultaneously enacted optional unitrust provision, EPTL 11-2.4. Moreover, in giving a list of factors to be considered by the courts in determining whether unitrust treatment should apply to a trust, the Legislature mentioned no absolute prohibitions (see EPTL 11-2.4 [e] [5] [A]), and created a presumption in favor of unitrust application (EPTL 11-2.4 [e] [5] [B]). We conclude that the Legislature did not mean to prohibit trustees who have a beneficial interest from electing uni-trust treatment.

It is certainly true that the common law in New York contains an absolute prohibition against self-dealing, in that “a fiduciary owes a duty of undivided and undiluted loyalty to those whose interests the fiduciary is to protect” (Birnbaum v Birnbaum, 73 NY2d 461, 466 [1989]. “The trustee is under a duty to the beneficiary to administer the trust solely in the interest of the beneficiary” (Restatement [Second] of Trusts § 170 [1]). In this case, however, the trustees owe fiduciary obligations not only to the trust’s income beneficiary, Bertha Heller, but also to the other remainder beneficiaries, Suzanne Heller and Faith Willinger. That these beneficiaries’ interests happen to align with the trustees’ does not relieve the trustees of their duties to them. Here, we cannot conclude that the trustees are prohibited from electing unitrust treatment as a matter of common-law principle.

That the trustees are remainder beneficiaries does not, by itself, invalidate a unitrust election. Nevertheless, a unitrust election from which a trustee benefits will be scrutinized by the courts with special care. In determining whether application of the optional unitrust provision is appropriate, it remains for the Surrogate to review the process and assure the fairness of the trustees’ election, by applying relevant factors including those enumerated in EPTL 11-2.4 (e) (5) (A). Application of these factors here presents questions of fact precluding summary judgment.

IV

Davis seeks to reinstate Surrogate’s Court’s determination that the unitrust election could not be made retroactive to January 1, 2002. In our view, however, the Legislature structured EPTL 11-2.4 so that it could be applied retroactively. EPTL 11-2.4 (d) (1) provides that a trustee who elects unitrust status may specify the date on which the interest of a beneficiary begins. Thus, the statute vests trustees with authority to determine the effective date of unitrust elections.

Moreover, EPTL 11-2.4 (b) (6) instructs a trustee who elects unitrust treatment to “determine the unitrust amount properly payable for any preceding and current valuation year of the trust” (emphasis added), unless the election is “expressly made effective prospectively as permitted under clause (e) (4) (a).” The trustee is then required to pay to, or recover from, the current beneficiary the difference between the unitrust amount and any amount actually paid for any completed valuation year. (EPTL 11-2.4 [b] [6].) This provision envisages retroactive application of a unitrust regime. The required recomputation of preceding years’ beneficial interests would serve no purpose if retroactive application were barred.

EPTL 11-2.4 (e) (4) (A), on which Surrogate’s Court relied, is not to the contrary. This section provides that the optional uni-trust provision

“shall apply to a trust. . . as of the first year of the trust in which assets first become subject to the trust, unless the governing instrument or the court in its decision provides otherwise, or unless the election in accordance with clause (e) (1) (B) is expressly made effective as of the first day of the first year of the trust commencing after the election is made.”

On the most plausible interpretation of this less than lucid provision, EPTL 11-2.4 (e) (4) (A) actually contemplates retroactivity, insofar as it provides the initial funding of the trust as a default starting point for unitrust treatment of a trust created on or after January 1, 2002. Certainly, EPTL 11-2.4 (e) (4) (A) should not be read as taking away from trustees the authority given them by EPTL 11-2.4 (d) (1) to specify the effective date of a unitrust election.

We therefore hold that a trustee may elect unitrust status for a trust retroactively to January 1, 2002, the effective date of EPTL 11-2.4. Appellant’s remaining contentions lack merit.

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

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

Order affirmed, etc.

      . See e.g. Legis Mem in Support of 5th Report of EPTL-SCPA Legis Advisory Comm, 14 Warren’s Heaton, Surrogates’ Courts, Appendix 5.03, at App 5-171 (6th ed rev).

      . The former Principal and Income Act (EPTL 11-2.1) was superseded by the Uniform Principal and Income Act (EPTL art 11-A) enacted in 2001. The former act does not apply to receipts and expenses received or incurred after January 1, 2002 (EPTL 11-2.1 [m]).

      . See Tur ano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 17B, EPTL art 11-A, 2006 Pocket Part, at 82-83; see also 5th Report of EPTL-SCPA Legis Advisory Comm, 14 Warren’s Heaton, Surrogates’ Courts, Appendix 5.01, at App 5-4—5-13 (6th ed rev).

      . See 14 Warren’s Heaton, Surrogates’ Courts, at App 5-4—5-5.


author: Ciparick, J.

text:
    [ 848 NE2d 1292, 815 NYS2d 915]
    In the Matter of Diane Ballard, Appellant, v HSBC Bank USA et al., Respondents.
    Argued March 29, 2006;
    decided May 11, 2006

      POINTS OF COUNSEL

      Offermann, Cassano, Greco, Slisz & Adams, LLP, Buffalo (Josephine A. Greco and Kevin P. Wicka of counsel), for appellant.
    I. The Appellate Division improperly dismissed this matter on the ground of lack of subject matter jurisdiction. (Matter of Fry v Village of Tarrytown, 89 NY2d 714; Clarke v Davis, 277 AD2d 902; Matter of State Div. of Human Rights v Gillotte, 41 AD2d 890; Addesso v Shemtob, 70 NY2d 689; Matter of Radich v Council of City of Lackawanna, 93 AD2d 559; Deth v Castimore, 245 App Div 156; Matter of National Gypsum Co., Inc. v Assessor of Town of Tonawanda, 4 NY3d 680.) II. The Appellate Division should not have dismissed the petition upon a motion since there were not exigent circumstances warranting dismissal on motion papers. (Matter of Association of Bar of City of N.Y., 222 App Div 580; Barkley v New York Cent. & H.R.R. Co., 42 App Div 597.)

      Phillips Lytle LLP, Buffalo (James R. Grosso of counsel), for HSBC Bank USA, respondent.
    I. The Supreme Court lacks subject matter jurisdiction over complaints filed with the New York State Division of Human Rights. (Matter of Fry v Village of Tarrytown, 89 NY2d 714; Sohn v Calderon, 78 NY2d 755; Thrasher v United States Liab. Ins. Co., 19 NY2d 159; Kagen v Kagen, 21 NY2d 532; Matter of Seitz v Drogheo, 21 NY2d 181; Marine Midland Bank v New York State Div. of Human Rights, 75 NY2d 240; Scopelliti v Town of New Castle, 210 AD2d 308; Gad-Tadros v Bessemer Venture Partners, 326 F Supp 2d 417;
      York v Association of Bar of City of N.Y., 286 F3d 122; Ganthier v North Shore-Long Is. Jewish Health Sys., Inc., 345 F Supp 2d 271.) II. The Supreme Court lacks subject matter jurisdiction over this proceeding because petitioner failed to include a return date in her notice of petition. (Ling Ling Yung v County of Nassau, 77 NY2d 568; Matter of Niagara Mohawk Power Corp. v Town of Tonawanda Assessor, 309 AD2d 1251, 1 NY3d 507, 3 NY3d 635; Lyles v State of New York, 3 NY3d 396; Matter of One Beacon Ins. Co./CGU Ins. Co. v Daly, 7 AD3d 717; Rodriguez v State of New York, 307 AD2d 657; Sangiacomo v County of Albany, 302 AD2d 769; Matter of Nationwide Ins. Enter. [Denga], 302 AD2d 929; Matter of Oates v Village of Watkins Glen, 290 AD2d 758; Matter of Figaro v New York State & Local Retirement Sys., 203 AD2d 678, 84 NY2d 801.) III. HSBC Bank USA’s filing of a notice of cross petition and cross petition did not confer subject matter jurisdiction on the Supreme Court. (Matter of Schor v St. Francis Hosp., 111 AD2d 852; Matter of State Div. of Human Rights v Fairway Apts. Corp., 39 AD2d 761, 33 NY2d 754; Matter of Gil v New York State Div. of Human Rights, 17 AD3d 365; Grinan v Santaella, 89 AD2d 866; Matter of Fry v Village of Tarrytown, 89 NY2d 714.) IV Should subject matter jurisdiction exist, the Appellate Division’s order should nonetheless be affirmed because petitioner’s failure to include a return date in her notice of petition resulted in a lack of personal jurisdiction over HSBC Bank USA and the petition being barred by the statute of limitations. (Matter of Niagara Mohawk Power Corp. v Town of Tonawanda Assessor, 309 AD2d 1251; Matter of Nationwide Ins. Enter. [Denga], 302 AD2d 929; Matter of Oates v Village of Watkins Glen, 290 AD2d 758; Matter of Gershel v Porr, 89 NY2d 327; Matter of Figaro v New York State & Local Retirement Sys., 203 AD2d 678.) V HSBC Bank USA’s filing of a notice of cross petition did not confer personal jurisdiction over it. (Floyd v Salomon Bros., 249 AD2d 139, 92 NY2d 816.) VI. HSBC Bank USA did not waive its objection to personal jurisdiction. (Matter of Fry v Village of Tarrytown, 89 NY2d 714; Harris v Niagara Falls Bd. of Educ., 6 NY3d 155; Matter of Schor v St. Francis Hosp., 111 AD2d 852; Cole v Mandell Food Stores, 93 NY2d 34; Clemens v Nealon, 202 AD2d 747; Matter of Wood v Glass, 226 AD2d 387; Morales v County of Nassau, 94 NY2d 218; Colbert v International Sec. Bur., 79 AD2d 448, 53 NY2d 608; Matter of Fiedelman v New York State Dept, of Health, 58 NY2d 80; Al-Dohan v Kouyoumjian, 93 AD2d 714.)
   OPINION OF THE COURT

Ciparick, J.

The issue before this Court is whether the failure of petitioner Diane Ballard to include a return date in a notice of petition constitutes a nonwaivable jurisdictional defect under Executive Law § 298. We hold that it does not and that respondent HSBC waived its right to challenge the alleged defect.

Following a determination by respondent Edward A. Fried-land, Acting Commissioner of the New York State Division of Human Rights, petitioner Diane Ballard filed a petition in Supreme Court on July 23, 2004, seeking review, pursuant to Executive Law § 298, of that part of the order that was adverse to her. Ballard’s notice of petition left blank the return date as no justice had yet been assigned to the matter. Copies of the notice of petition and petition were served on respondents along with a letter from petitioner explaining that she would advise respondents of the return date when it was assigned. Two weeks later, on August 4, 2004, after a Supreme Court Justice was assigned to the matter, Ballard sent a letter to the Justice, copying the other parties, stating: “Based upon discussions with your Chambers, we would like to make this matter returnable before you on August 23, 2004, at 9:30 a.m.”

The following day, August 5, 2004, respondent HSBC filed a cross petition specifying a return date of September 13, 2004 and stating that “Q jurisdiction is proper pursuant to Executive Law § 298.” On August 6, HSBC responded to Ballard’s letter of August 4, stating in part:

“CPLR 403 requires that a notice of petition specify the time and place of the hearing and CPLR 7804 requires that the time be at least 20 days before the return date. As August 23 is less than 20 days from service of your letter the petition cannot be made returnable on that date. Moreover, HSBC’s cross-petition is returnable on September 13, 2004, which is the next available return date . . . which is at least 20 days after the notice of cross-petition. . . . Accordingly, I request that you adjourn the return date of the petition to September 13.”

HSBC did not raise an objection based on any alleged jurisdictional defect at that time. It was not until August 18, after the filing of the cross petition, that HSBC moved in Supreme Court to dismiss Ballard’s petition for lack of jurisdiction and as barred by the statute of limitations, based on Ballard’s failure to include a return date in her notice of petition. Ballard cross-moved for an order extending her time to serve the notice of petition and petition or to deem her prior service good and sufficient. Respondent Friedland served an answer and moved to transfer the matter to the Appellate Division pursuant to Executive Law § 298. The motions and the underlying petitions were then adjourned to October 18, 2004.

In what amounts to an advisory opinion, dated March 25, 2005, Supreme Court found that the court lacked subject matter jurisdiction, opining that based on the language of Executive Law § 298, petitioner’s failure to include a return date on the notice of petition “implicates subject matter jurisdiction, not jurisdiction of the parties” (8 Misc 3d 521, 526 [2005]) and transferred the matter to the Appellate Division as required by Executive Law § 298. HSBC then moved before the Appellate Division to dismiss the petition for lack of subject matter jurisdiction and as barred by the statute of limitations. Ballard opposed the motion arguing that the objections sounded of personal jurisdiction and that any such claim was waived. Thereafter, HSBC filed a second motion to dismiss on personal jurisdiction and statute of limitations grounds. The Appellate Division subsequently granted HSBC’s motion stating only that the Court lacked subject matter jurisdiction. We granted Ballard’s motion for leave to appeal and now reverse the Appellate Division and reinstate the petition.

Executive Law § 298 allows any “complainant, respondent or other person aggrieved by an order of the commissioner” to “obtain judicial review thereof’ in a special proceeding “initiated by the filing of a notice of petition and petition” in Supreme Court. Executive Law § 298 further states that:

“Upon the filing of a notice of petition and petition, the court shall have jurisdiction of the proceeding and of the questions determined therein, except that where the order sought to be reviewed was made as a result of a public hearing . . . the court shall make an order directing that the proceeding be transferred for disposition to the appellate division” (emphasis added).

CPLR 403 (a) provides that “[a] notice of petition shall specify the time and place of the hearing on the petition and the supporting affidavits, if any, accompanying the petition.”

Respondent HSBC argues that because section 298 requires the filing of a notice of petition and section 403 (a) requires that a notice of petition must include a return date, petitioner’s failure to specify a return date was a defect in her commencement of the special proceeding implicating subject matter jurisdiction, and the proceeding should be dismissed. HSBC further argues that Executive Law § 298 conditions subject matter jurisdiction “[u]pon the filing of a notice of petition and petition” and such requirement is a condition precedent to the exercise of such jurisdiction.

Petitioner contends that her filing was not defective, and that even if it was, it would constitute only a personal jurisdiction defect as to which HSBC waived its objection. She further contends that such a defect does not undermine the court’s authority to hear the case.

“The question of subject matter jurisdiction is a question of judicial power: whether the court has the power, conferred by the Constitution or statute, to entertain the case before it” (Matter of Fry v Village of Tarrytown, 89 NY2d 714, 718 [1997]). We have routinely held that technical defects in filings do not. fall under the umbrella of subject matter jurisdiction when they do not undermine the constitutional or statutory basis to hear a case (see Matter of Fry, 89 NY2d at 718-719; see generally Matter of National Gypsum Co., Inc. v Assessor of Town of Tonawanda, 4 NY3d 680 [2005]; Harris v Niagara Falls Bd. of Educ., 6 NY3d 155 [2006]).

Last year, in National Gypsum Co., we held that a notice of petition, in a special proceeding filed under RPTL article 7, was not “jurisdictionally defective” where “petitioner included a return date that was later changed by court personnel”—essentially “a ‘fictitious’ hearing date” (4 NY3d at 682, 683). We explained that because petitioner could not possibly include an accurate return date before a judge had been assigned to the action, “[a]ny other interpretation of the statute would be patently unfair to a party attempting to commence such a proceeding” (id. at 684). Even more recently, in Harris, we held that “a defect in compliance with the commencement-by-filing system does not deprive a court of subject matter jurisdiction and, accordingly, is waived absent a timely objection by the responding party” (6 NY3d at 158, citing Fry, 89 NY2d at 718).

Here, the competence of the court and its authority to hear the proceeding stem from the language of Executive Law § 298, which conveys subject matter jurisdiction upon the court to hear challenges by aggrieved parties to rulings made by the Commissioner of the State Division of Human Rights on unlawful discrimination claims. Any alleged technical defect as to the date on the notice of petition invokes a claim of improper commencement or personal jurisdiction, at best. This is not a case where a condition precedent implicates subject matter jurisdiction (cf. Scantlebury v New York City Health & Hosps. Corp., 4 NY3d 606 [2005] [notice of intention to commence an action as required by section 7401 (2) of McKinney’s Unconsolidated Laws of New York (New York City Health and Hospitals Corporation [HHC] Act [L 1969, ch 1016, § 1, as amended] § 20 [2]) is a condition precedent to a suit against HHC]). Thus, the Appellate Division’s dismissal of the proceeding on the ground of lack of subject matter jurisdiction was improper.

As to personal jurisdiction, to the extent that petitioner’s commencement of the action may have been defective, respondent HSBC waived its right to challenge the defect by actively participating in the proceeding without timely objecting to the defect on personal jurisdiction grounds. Raising no objections to the manner of commencement, HSBC’s verified cross petition specifically asserted that “jurisdiction is proper.” Neither the motion HSBC made in Supreme Court nor the second motion at the Appellate Division cured this defect as HSBC was required to either move to dismiss the petition before filing its cross petition or affirmatively raise the issue in an answer (see CPLR 404 [a]). Furthermore, HSBC’s initial motion at the Appellate Division did not seek dismissal on personal jurisdiction grounds (see CPLR 3211 [e]). As we stated in Harris, “defendants and respondents are warned that if they want to capitalize on technicalities they must mind their own procedures” (6 NY3d at 159, quoting Siegel, NY Prac § 63, at 94 [4th ed]). As respondent failed to timely raise a challenge to personal jurisdiction, that claim was waived and the petition may go forward.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the motion to dismiss the petition by respondent HSBC denied.

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

Order reversed, etc.

      . The Commissioner dismissed Ballard’s claim that she was discriminated against when she was not promoted between 1985 and 1987 and her claim that she was unlawfully terminated based on retaliation. However, the Commissioner ordered HSBC to pay Ballard $35,000 as compensatory damages for mental anguish and humiliation suffered as a result of race discrimination and $5,000 as a result of disability discrimination.

      . HSBC never answered the petition.

      . It should be noted that in response to Supreme Court’s inquiry concerning subject matter jurisdiction HSBC shifted its position and conceded that its notice of cross petition and cross petition were not timely filed and the court was without jurisdiction to hear it. The issue of the viability of the cross petition is not a subject of this appeal.

      . Respondent HSBC also answered petitioner’s letter setting forth a return date not with a claim that the action should he dismissed, but with a letter seeking an adjournment of that date to conform with the return date of the cross petition.