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

text:
    [998 NE2d 804, 976 NYS2d 4]
    In the Matter of Eric J. Koch, D.O., Respondent, v James G. Sheehan, New York State Medicaid Inspector General, Appellant.
    Argued September 9, 2013;
    decided October 22, 2013

      POINTS OF COUNSEL

      Eric T. Schneiderman, Attorney General, Albany (Victor Paladino, Barbara D. Underwood and Andrew D. Bing of counsel), for appellant.
    I. The Office of the Medicaid Inspector General acted rationally and within its authority in excluding petitioner, a physician, from the Medicaid program based on a Board for Professional Medical Conduct consent order that allows him to continue to practice medicine. (Vaynshelbaum v Daines, 30 Misc 3d 1227[A], 2011 NY Slip Op 50220[U]; Matter of Mihailescu v Sheehan, 25 Misc 3d 258; Matter of Liguori v Beloten, 76 AD3d 1156, 16 NY3d 702; Matter of Pekarsky v Commissioner of N.Y. State Dept. of Social Servs., 257 AD2d 905; Matter of Blossom View Nursing Home v Novello, 4 NY3d 581.) II. The Office of the Medicaid Inspector General was not required to conduct an independent investigation before excluding a provider from the Medicaid program under 18 NYCRR 515.7 (e). (Matter of Liguori v Beloten, 76 AD3d 1156, 16 NY3d 702.)

      Brown & Tarantino, LLC, Buffalo (Susan A. Eberle of counsel), for respondent.
    I. The Appellate Division properly determined that appellant Office of the Medicaid Inspector General’s exclusion of respondent physician from the Medicaid program was arbitrary and capricious. (Matter of Mihailescu v Sheehan, 25 Misc 3d 258; Vaynshelbaum v Daines, 30 Misc 3d 1227[A], 2011 NY Slip Op 50220[U].) II. The Appellate Division properly determined that appellant Office of the Medicaid Inspector General did not have a proper basis for exclusion of respondent physician from the Medicaid program pursuant to 18 NYCRR 515.7 (e). (People v Daiboch, 265 NY 125; Buechel v Bain, 97 NY2d 295; Ross v Medical Liab. Mut. Ins. Co., 75 NY2d 825.) III. Appellant Office of the Medicaid Inspector General’s exclusion of respondent physician from the Medicaid program constitutes an abuse of discretion. (Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222; Matter of Liguori v Beloten, 76 AD3d 1156.)

      Kern Augustine Conroy & Schoppmann, P.C., Westbury (Donald R. Moy of counsel), for Medical Society for the State of New York, amicus curiae.
    I. The determination of the Office of the Medicaid Inspector General is irrational, arbitrary and capricious because it would result in a petitioner being penalized and disciplined, a second time without any independent investigation after New York State Department of Health, through the Board for Professional Medical Conduct and Office of Professional Medical Conduct, provided assurance that the consent agreement and order would “resolve this matter.” (Matter of New York State Health Facilities Assn., Inc. v Sheehan, 100 AD3d 1086; Matter of Mihailescu v Sheehan, 25 Misc 3d 258.) II. The Appellate Division correctly held that the Office of the Medicaid Inspector General’s determination excluding petitioner from the Medicaid program was arbitrary and capricious. (Matter of Mihailescu v Sheehan, 25 Misc 3d 258; Vaynshelbaum v Daines, 30 Misc 3d 1227.)
   OPINION OF THE COURT

Read, J.

We hold that the Office of the Medicaid Inspector General (OMIG or the agency) is authorized to remove a physician from New York’s medical assistance (Medicaid) program in reliance solely on a consent order between the physician and the Board for Professional Medical Conduct (BPMC), regardless of whether BPMC chooses to suspend the physician’s license or OMIG conducts an independent investigation (see 18 NYCRR 515.7 [e]). OMIG has a responsibility to insure that scarce Medicaid dollars are spent on quality medical care for Medicaid recipients, who are often unable to vote with their feet. The agency may therefore properly decide that when the government is paying for the medical care of disadvantaged citizens, providers must possess more than the minimum level of competence necessary to avoid license suspension (see generally Matter of Medicon Diagnostic Labs. v Perales, 74 NY2d 539, 545 [1989] [“the agency charged with the responsibility of administering the medicaid program has inherent authority to protect the quality and value of services rendered by providers in that program”]). Indeed, federal law requires, as a condition of receipt of federal funding, that states institute administrative procedures enabling them to exclude Medicaid providers for furnishing substandard services, regardless of whether those services were supplied to Medicaid recipients (see 42 CFR 1002.210, 1001.701 [a] [2]).

In this litigation, Supreme Court annulled OMIG’s determination to terminate petitioner physician’s participation in the Medicaid program on the basis of a BPMC consent order, and directed his reinstatement. In the consent order, petitioner physician pleaded no contest to charges of professional misconduct and agreed to 36 months’ probation. Upon OMIG’s appeal, the Appellate Division affirmed, holding that it was arbitrary and capricious for the agency to bar petitioner physician from treating Medicaid patients when BPMC permitted him to continue to practice; and that OMIG was required to conduct an independent investigation before excluding a physician from Medicaid on the basis of a BPMC consent order (see 95 AD3d 82 [4th Dept 2012]). We subsequently granted OMIG permission to appeal (19 NY3d 813 [2012]).

We disagree with the Appellate Division’s rationale, but affirm because OMIG’s determination was arbitrary and capricious for another reason. Specifically, OMIG did not explain why the BPMC consent order in this case caused it to exercise its discretion pursuant to 18 NYCRR 515.7 (e) to exclude petitioner physician from the Medicaid program.

I.

The Office of Professional Medical Conduct (OPMC) comprises an investigatory arm (also called the Office of Professional Medical Conduct) and an adjudicatory arm, the BPMC. OPMC is the authority within the Department of Health (DOH) charged with investigating complaints of physician misconduct, and BPMC imposes sanctions if misconduct is found to have occurred. Frequently, BPMC will enter into a consent order with the physician under investigation, as happened here. OMIG, also housed within DOH, is responsible for policing New York’s Medicaid program. The legislature consolidated the powers of several extant state entities into one unit when it created OMIG in 2006 and placed it under the umbrella of DOH.

OPMC sends the results of its investigations, including consent orders, to OMIG, which then determines whether the physician in question should be terminated from participating in the Medicaid program. Sometimes, as in this case, OMIG removes the physician from the program even though the sanctions imposed by BPMC do not include license suspension. Petitioner physician questions the wisdom of this “collateral consequence” of a BPMC consent order, and argues that OMIG must defer to BPMC. But the applicable statutes and regulations authorize OMIG to exclude a physician from the Medicaid program regardless of the nature of the sanctions directed by BPMC.

When it established OMIG, the legislature enacted an extensive list of its functions and duties, including responsibility to

“pursue civil and administrative enforcement actions against any individual or entity that engages in fraud, abuse, or illegal or improper acts or unacceptable practices perpetrated within the medical assistance program, including but not limited to . . .
(c) imposition of administrative sanctions and penalties in accordance with state and federal laws and regulations .... In the pursuit of such civil and administrative enforcement actions under this subdivision, the inspector shall consider the quality and availability of medical care and services and the best interest of both the medical assistance program and recipients” (Public Health Law § 32 [6] [emphases added]).

And long before OMIG’s creation, the Department of Social Services, which was responsible for overseeing Medicaid prior to 1996 when this function was transferred to DOH, promulgated numerous regulations governing participation in and removal from the Medicaid program (see e.g. 18 NYCRR parts 504, 515). These Medicaid regulations empowered the successive responsible governmental entities to sanction and exclude medical professionals from the program (see e.g. 18 NYCRR 515.3 [a]). As relevant here, “the department” (meaning, in the current context, OMIG) is authorized to take “immediate action” to impose sanctions in certain circumstances “upon notice to the person” (18 NYCRR 515.7 [a]); specifically,

“[u]pon receiving notice that a person has been found to have violated a State or Federal statute or regulation pursuant to a final decision or determination of an agency having the power to conduct the proceeding . . . or after resolution of the proceeding by stipulation or agreement, and where the violation resulting in the final decision or determination would constitute an act described as professional misconduct or unprofessional conduct by the rules or regulations of the State Commissioner of Education or the State Board of Regents” (18 NYCRR 515.7 [e] [emphases added]).

The consent order at the heart of this case is without doubt a “stipulation or agreement” resolving a proceeding alleging professional misconduct; thus, OMIG’s decision to terminate petitioner physician’s participation in the Medicaid program falls squarely within the agency’s explicit powers. Notably, OMIG is not required by any statute or regulation to conduct an independent investigation or develop additional information or defer to BPMC before making such a decision. Of course, OMIG may always take additional investigatory steps if, in its discretion, it deems them necessary to inform its decisionmaking. Likewise, the agency may always decide, in a particular case, not to remove a disciplined physician from the Medicaid program. Indeed, in the majority of cases resolved by BPMC consent orders, OMIG apparently does not exclude the physicians involved. But nothing in the law or regulations requires this forbearance.

II.

The record includes a form—a “Consent Order Review Sheet”—completed by the OMIG auditor, a registered nurse with 41 years of experience, including extensive service on hospital audit committees for professional services and quality assurance. This review sheet includes, under the section captioned “Recommendation,” a few handwritten, barely legible, crossed out and interlined notes. These notes appear merely to repeat that there were two charges of negligence and that petitioner physician was placed on probation for 36 months, the same information summarized in a previous section of the review sheet, captioned “Consent Order Information.”

In this case there were indeed two serious charges of professional misconduct, involving the treatment of two elderly women, both of whom died soon after coming under petitioner physician’s care. But the basis for the auditor’s recommendation to terminate petitioner physician’s participation in the Medicaid program, which was approved without comment by four additional agency reviewers, does not appear anywhere in the administrative record. Although OMIG is, as already discussed, authorized to remove a physician from the program solely on the basis of a BPMC consent order, its decision to do so is concededly discretionary. The agency therefore has an obligation to explain why in a particular case exclusion was thought to be warranted.

On this record, there is no telling. Did the auditor recommend termination because there were two charges of professional misconduct? because both patients died? because the patients were elderly and the Medicaid program serves a significant elderly population? for some other reason(s) evident in the charges, which were available to the auditor? We simply do not know. In short, although OMIG is not required, by law, and surely should not be commanded by the courts, to defer to BP-MC’s judgments or undertake additional time- and resource-consuming investigations, here there is inadequate record support for the decision to exclude this particular sanctioned physician from the Medicaid program. As a result, OMIG’s decision was arbitrary and capricious and an abuse of discretion.

III.

Finally, another aspect of this case merits discussion. Petitioner physician settled with BPMC “in full satisfaction” of the charges of professional misconduct lodged against him. He complains that, as a result of OMIG’s subsequent action to exclude him from the Medicaid program, he did not achieve the complete settlement that he bargained for, even though BPMC and OMIG are both “units” within DOH. But BPMC and OMIG have separate statutory authority and different purposes. When resolving charges of professional misconduct with BPMC, physicians and their attorneys should be mindful that a settlement with BPMC does not bind OMIG, as petitioner physician discovered in this case.

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

Smith, J. (concurring).

The Board for Professional Medical Conduct (BPMC) found that petitioner had practiced medicine negligently on two occasions, but did not suspend him from practice, choosing instead to impose a three-year period of probation. The Office of the Medicaid Inspector General (OMIG), relying on nothing but BPMC’s finding, prohibited petitioner from treating Medicaid patients—which, as a practical matter, makes it difficult if not impossible for petitioner to practice medicine. I agree with the majority that OMIG’s determination was arbitrary and capricious, but would rest that conclusion on the broader ground adopted by the Appellate Division.

I

BPMC is a unit within the Department of Health consisting of a majority of doctors and a minority of lay members (Public Health Law § 230 [1]). It is responsible for adjudicating professional misconduct complaints against doctors. A separate unit of the Department of Health, the Office of Professional Medical Conduct (OPMC) is responsible for investigating and prosecuting such complaints. OPMC conducted an investigation of petitioner’s treatment of two patients in 2006. The investigation led, in 2009, to a “Consent Agreement and Order” signed by petitioner, BPMC and OPMC, in which petitioner pleaded “no contest” to charges that his care and treatment of both patients “failed to meet accepted standards of care.” The agreement includes a two-page “Statement of Charges,” briefly describing the ways in which petitioner was said to have erred. Petitioner agreed to a 36-month period of probation, subject to 11 specific terms, among them that petitioner would “practice medicine only when monitored” by a doctor acceptable to OPMC, and that he would enroll in and complete a continuing education program.

After this agreement was signed, petitioner’s case came to OMIG’s attention. OMIG is also part of the Department of Health. It was created in 2006 to consolidate in a single office “Medicaid fraud detection, prevention and recovery functions” and to “streamline the state’s process of detecting and combating Medicaid fraud and abuse” (Public Health Law § 30). The statutes governing OMIG suggest that its primary focus should be on fraudulent and other excessive Medicaid billing, but its mandate is not expressly restricted in that way. A regulatory definition of “abuse” includes “payments for services which fail to meet recognized standards for health care” (18 NYCRR 515.1 [b] [1]).

Under another regulation, when OMIG receives notice that BPMC or some other agency has found a person guilty of “professional misconduct or unprofessional conduct,” OMIG “may immediately sanction the person” (18 NYCRR 515.7 [e] [regulation of Department of Social Services]; see Public Health Law § 31 [1] [transferring certain DSS duties to OMIG]). Possible sanctions include exclusion from the Medicaid program “for a reasonable time” (18 NYCRR 515.3 [a] [1]). An OMIG document in the record before us says that, when OMIG receives a consent order from OPMC, it “will obtain the full investigative file and consider the underlying facts to make an independent decision on whether exclusion is warranted,” but that did not happen in petitioner’s case. Rather, a registered nurse employed by OMIG as a “Health Surveyor” reviewed, as far as the record shows, only the Consent Agreement and Order, with its attachments. Having done so, the Health Surveyor concluded that petitioner’s “conduct was so negligent that the OMIG should . . . exclude him from participating as a provider in the Medicaid program,” and OMIG adopted that recommendation. The Health Surveyor’s reasons for concluding that the conduct was “so negligent” do not appear in the record.

It is undisputed that exclusion from the Medicaid program is a grave sanction for any doctor, even one who, like petitioner, primarily treats patients who are not Medicaid recipients (see Matter of Mihailescu v Sheehan, 25 Misc 3d 258, 261 [Sup Ct, NY County 2009] [“respondents do not deny petitioner’s assertion that, under Medicaid regulations, her continuing exclusion from the roster of Medicaid providers effectively bars any governmentally licensed or operated facility from hiring her”]). Petitioner asserted below that, after being listed on the Medicaid website as an excluded physician, he was notified by a private insurer that it would exclude him as a qualified provider, and that he expected to receive similar notices from other insurers. He also alleged that “it will be difficult if not impossible for him to secure or renew privileges at any area hospitals in the future if he is excluded from Medicaid.” OMIG does not specifically deny these assertions, though it points out that petitioner is not barred from treating non-Medicaid patients.

II

Petitioner argues that what has happened here is essentially a second-guessing of BPMC’s determination by OMIG. While BPMC, a board composed primarily of doctors and principally concerned with maintaining high standards of professional care, decided that petitioner should, subject to certain restrictions, be allowed to continue treating patients, OMIG decided, with no basis beyond the facts found by BPMC, that he could not treat Medicaid patients. I agree with petitioner that OMIG’s action was arbitrary and capricious for this reason.

Where the only issue is the professional quality of care being rendered, and where OMIG has no information before it that BPMC did not have, OMIG should defer to BPMC’s decision on whether a doctor may safely be allowed to furnish medical care. The majority of the lower courts that have considered this issue have so held (see Mihailescu, 25 Misc 3d at 265-267; Matter of Pearl v Office of the Medicaid Inspector Gen., 2009 NY Slip Op 32492[U] [Sup Ct, Albany County 2009]; Matter of Haluska v State of N.Y. Off. of State Medicaid Inspector Gen., Sup Ct, Chemung County, Apr. 7, 2010, O’Shea, J., index No. 2009-2774; Matter of Napoli v Sheehan, Sup Ct, Erie County, May 25, 2010, Drury, J., index No. 2009-14524; but see Matter of Halliday v State of N.Y. Off. of Medicaid Inspector Gen., Sup Ct, Albany County, July 2, 2010, Connolly, J., index No. 2575-10; Matter of Blab v Sheehan, Sup Ct, Albany County, Sept. 30, 2010, Sackett, J., index No. 4275-10).

I do not suggest that OMIG should be limited to examining cases of financial fraud and abuse, or that it has no role in considering whether a doctor’s treatment of patients meets professional standards. If OMIG had acted against petitioner on the basis of its independent investigation, and had not relied entirely on facts that BPMC had already found, I might find this to be a different case. Nor do I suggest that OMIG need defer to BPMC where something other than the care and treatment of patients is at issue. I might also think this a different case if BPMC’s discipline of petitioner were based on poor record-keeping. But it was in fact based exclusively on the quality of the care that petitioner gave his patients. In such a case, OMIG should not, in effect, review and reject BPMC’s determination that petitioner is fit to be trusted with patient care.

Judges Graffeo, Rivera and Abdus-Salaam concur with Judge Read; Judge Smith concurs in result in an opinion in which Chief Judge Lippman and Judge Pigott concur.

Order affirmed, with costs.


source: Caselaw Access Project

author: Rivera, J.

license: Public Domain

text:
    [999 NE2d 1117, 977 NYS2d 672]
    The People of the State of New York, Respondent, v Daryl H., Appellant.
    Argued September 9, 2013;
    decided October 10, 2013

      POINTS OF COUNSEL

      Barbara J. Davies, Chief Attorney, The Legal Aid Bureau of Buffalo, Inc., Buffalo (Kristin M. Preve and David C. Schopp of counsel), for appellant.
    I. The trial court’s erroneous ruling involving Dr. Dori Marshall deprived appellant of his federal and state constitutional rights to present a defense, to confront witnesses, and to a fair trial, necessitating the reversal of his conviction. (People v Goldstein, 6 NY3d 119; Crawford v Washington, 541 US 36; Davis v Alaska, 415 US 308; Chambers v Mississippi, 410 US 284; Pointer v Texas, 380 US 400; Brady v Maryland, 373 US 83; People v Gissendanner, 48 NY2d 543; People v Rosario, 9 NY2d 286; People v Jones, 73 NY2d 427; People v Swan, 158 AD2d 158.) II. The trial court’s erroneous evidentiary ruling involving the complainant’s father deprived appellant of his federal and state constitutional rights to present a defense, to confront witnesses, and to a fair trial, necessitating the reversal of his conviction. (People v Poole, 55 AD3d 1349; People v Garcia, 47 AD3d 830; People v Ocampo, 28 AD3d 684; People v Szwec, 271 AD2d 322; People v Corby, 6 NY3d 231; People v Chin, 67 NY2d 22; People v Halter, 19 NY3d 1046; Chapman v California, 386 US 18; People v Crimmins, 36 NY2d 230; Delaware v Van Arsdall, 475 US 673.)

      Frank A. Sedita, III, District Attorney, Buffalo (Matthew B. Powers and Donna A. Milling of counsel), for respondent.
    I. Defendant’s claim that the trial court’s ruling denied him his right to cross-examine an expert concerning the validity of her opinion, as well as his right to confront witnesses and present a defense, is belied by the record and otherwise harmless. (People v Williams, 81 NY2d 303; People v Bowen, 67 AD3d 1022, 14 NY3d 769; Crane v Kentucky, 476 US 683; People v Miller, 91 NY2d 372; People v Cronin, 60 NY2d 430; People v Sugden, 35 NY2d 453; People v Bornholdt, 33 NY2d 75; People v Crimmins, 36 NY2d 230; People v Silver, 33 NY2d 475.) II. Defendant’s claim that the trial court denied him his right to confront witnesses, to present a defense, and to a fair trial is unpreserved, meritless and harmless. (People v Martin, 50 NY2d 1029; People v Gray, 86 NY2d 10; People v Hawkins, 11 NY3d 484; People v Prado, 4 NY3d 725; People v Williams, 81 NY2d 303; People v Bowen, 67 AD3d 1022, 14 NY3d 769; People v Aska, 91 NY2d 979; People v Miller, 39 NY2d 543; People v Crimmins, 36 NY2d 230.)
   OPINION OF THE COURT

Rivera, J.

Defendant Daryl H. contests his conviction for assault in the first and second degrees, based on allegedly improper evidentiary trial rulings. The Appellate Division modified, vacating the second degree assault conviction on other grounds, and, as modified, affirmed (96 AD3d 1482 [2012]). We now affirm the order of the Appellate Division.

Defendant was a patient in the psychiatric ward of the Erie County Medical Center (ECMC) when he assaulted and severely injured another psychiatric patient, Darren W. The two men were in the television lounge one evening when defendant became angry at Darren W and then proceeded to hit him, and kick him in the head while he was lying on the floor, to the point of rendering Darren W motionless.

Three nurses observed the altercation and sounded an alarm after they unsuccessfully tried to intervene. Hospital staff responded to the alarm and escorted defendant to his room. There, he recounted the events surrounding the altercation to a psychiatry resident. Later that night, in response to another alarm, hospital staff found defendant yelling and swearing. A nurse eventually coaxed him into receiving an intravenous shot of antipsychotic medication.

The next morning, defendant met with Dr. Dori Marshall, who evaluated him to determine whether he posed a safety risk to himself or others. He told her that he had been in a fight and that the “other person deserved it.” In response to her questions about whether he knew what happened to people who assaulted others, he responded “you can be arrested” but contended that he would not be arrested because of his schizophrenia. Upon completion of her interview, Dr. Marshall called the ECMC Police and asked them to arrest defendant. An officer waited with defendant until the Buffalo Police arrived to take him into custody. Dr. Marshall prepared a discharge report describing her findings about defendant’s mental state and recommending his arrest. She later gave a deposition recounting these events.

Based on the attack, defendant was charged with attempted murder in the second degree (Penal Law §§ 110.00, 125.25 [1]) and assault in the first and second degrees (Penal Law §§ 120.10 [1]; 120.05 [1]). During the bench trial, Dr. Marshall testified about her interview with defendant. The testimony became the subject of several objections by both parties, with both sides receiving their share of favorable and unfavorable rulings. Initially, the People sought to elicit opinion evidence from her regarding defendant’s mental capacity during the course of the interview. However, Supreme Court sustained defense counsel’s objection that defendant’s mental capacity the day following the incident was irrelevant. Dr. Marshall then testified as to statements made by defendant. The People again sought to elicit opinion evidence and Supreme Court again sustained defense counsel’s objection.

During cross-examination of Dr. Marshall, defense counsel sought to ask her about the sources for her discharge report. The court sustained the People’s objection on the grounds of hearsay. The court stated that Dr. Marshall’s report was not inconsistent with her trial testimony and therefore could not be used for impeachment purposes. Defense counsel, however, elicited testimony about Dr. Marshall’s evaluation of defendant, including her recommendation to arrest him. She stated that she based her recommendation in part on her direct observations of the injury sustained by Darren W. and her assessment of defendant’s capacity to understand his actions.

The People then asked Dr. Marshall on redirect about her assessment of defendant. Over defense counsel’s objections, the court permitted this line of questioning because defense counsel had “opened the door” during cross-examination. Dr. Marshall then stated that if she had determined that defendant failed to respond to her questions, or was not oriented, or otherwise appeared psychotic, she would have treated him with medications, but that was not the case. She also stated that she would not have advocated for his arrest if she thought he lacked capacity.

The People also presented testimony of Darren W.’s father, who testified to his son’s injuries and identified him in photographs entered into evidence. On cross-examination, the People objected to defense counsel’s attempts to question the father about his civil lawsuit against the County of Erie arising out of his son’s injuries. In support of the proposed questions, defense counsel argued that he was making an offer of proof that the witness “feels that there’s some wrongdoing on the part of ECMC in addition to my client.” The court sustained the objection.

Defendant testified on his own behalf and stated that he is a diagnosed paranoid schizophrenic who sees demons and devils. He stated that he had been involuntarily hospitalized in the past and cannot find work. He then described how he had admitted himself at the ECMC because he had been seeing demons, unable to sleep, and off his medication. He described the altercation in the television lounge, stating that he responded to threatening statements and racial epithets lodged against him by Darren W. after defendant objected to Darren W. changing the television channel.

Defendant presented testimony from his psychiatric expert, Dr. Joseph, who testified that he knew defendant and had treated him in 2009. He testified defendant suffered from paranoid schizophrenia, characterized by quick mood changes, hostile and aggressive behavior, and unpredictable psychotic episodes. Dr. Joseph opined that it was unlikely defendant knew what he was doing during the altercation, concluding “the man is sick, he’s dangerously mentally ill. . . . He’s not a criminal. He’s still sick.”

The People presented rebuttal testimony from psychiatrist Dr. Horowitz, who opined that defendant did not lack the capacity to appreciate his conduct during the altercation. Dr. Horowitz based his determination on defendant’s psychiatric records and his interview of defendant. He also relied on statements by hospital staff and Dr. Marshall establishing that defendant could recount with clarity the events surrounding the attack.

The court convicted defendant of assault in the first and second degrees. On appeal, the Appellate Division modified by vacating the second degree assault conviction on grounds unrelated to the current appeal, and, as modified, affirmed. With respect to the evidentiary rulings that are the basis of the appeal before us, the Appellate Division rejected defendant’s claims that the Supreme Court’s evidentiary rulings deprived him of a fair trial.

On appeal to this Court, defendant argues that Supreme Court’s rulings limiting his examination of Dr. Marshall and Darren W.’s father denied him his federal and state constitutional rights to present a defense, to confront witnesses, and to a fair trial. We conclude that the Appellate Division properly concluded that defendant’s challenges to the rulings are without merit.

With respect to Dr. Marshall, defendant characterizes her as a de facto expert witness who gave an opinion as to his capacity. Defendant argues that the court improperly foreclosed defense counsel from probing the basis of her opinion at trial. He also argues that he should have been permitted to impeach Dr. Marshall’s expert testimony by reference to her discharge report and deposition.

Defendant is correct that he would have been entitled to probe the basis of Dr. Marshall’s opinion at the outset of cross-examination if she had offered one on direct examination (CPL 60.55 [1]; People v Jones, 73 NY2d 427, 430 [1989]). However, as the record establishes, the court limited the People’s direct examination of Dr. Marshall to facts: defendant’s admissions to her during the interview and the events leading up to his arrest. On direct examination, the court prevented Dr. Marshall from giving opinion testimony, including her assessment of defendant’s capacity at the time of his arrest. Dr. Marshall gave no opinion testimony, and defendant was not denied the opportunity to explore the basis of such testimony during cross-examination.

Moreover, defense counsel’s attempts to question the doctor with respect to her deposition and discharge report were properly rebuffed because, as a fact witness, any prior statements by her could only be admissible if inconsistent with her in-court statements. Supreme Court found they were not inconsistent, and defendant presents no reason to upset that finding on appeal.

Eventually, defense counsel did elicit testimony from Dr. Marshall regarding defendant’s capacity to appreciate his conduct. On cross-examination, Dr. Marshall admitted that her recommendation to arrest defendant relied, in part, on her assessment of his capacity. Her responses constituted opinion testimony, which defense counsel could have probed. However, counsel did not. During redirect, the People properly asked Dr. Marshall to elaborate her assessment. Nonetheless, during recross-examination, counsel did not pursue the hearsay basis for the capacity assessment. Under these circumstances, defendant cannot now seek to complain about the lost opportunity to explore opinion testimony occasioned by his counsel, and not by the court’s rulings.

Defendant incorrectly argues that this case presents a permutation of our decision in People v Goldstein (6 NY3d 119 [2005]). In Goldstein a psychiatric expert repeated to the jury out-of-court, testimonial statements made by acquaintances of the defendant. We held that introducing those statements implicated the Confrontation Clause of the Sixth Amendment of the Federal Constitution (id. at 127-129). We also raised the question of when, if ever, an expert may introduce the hearsay basis of opinion testimony (id. at 126-127). Here, Dr. Marshall did not introduce any hearsay statements, and testified that she based her capacity assessment of defendant on her interview with him. Thus, her testimony did not implicate the Confrontation Clause, and her opinion did not provide an illicit “conduit for hearsay” (id. at 126). Indeed, defense counsel successfully precluded such hearsay during the People’s direct examination.

Defendant’s challenge to his examination of Darren W’s father is also unavailing. Defendant argues that Supreme Court should have permitted defense counsel to cross-examine Darren W.’s father about his pending lawsuit in order to establish bias and thus impeach the witness. This challenge is unpreserved because it was not made with specificity before the trial court (People v Hawkins, 11 NY3d 484, 492 [2008]; People v Hines, 97 NY2d 56, 62 [2001]; People v Goode, 87 NY2d 1045, 1047 [1996]; People v Gray, 86 NY2d 10, 19 [1995]; People v Cona, 49 NY2d 26, 33 [1979]). Defense counsel’s proffer referred specifically to the father’s lawsuit as evidence that the father thought the hospital bore some responsibility for his son’s injuries. No interpretation of this objection can encompass a line of questioning to reveal witness bias (Hawkins, 11 NY3d at 492; Gray, 86 NY2d at 19-21; Cona, 49 NY2d at 33).

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

Chief Judge Lippman and Judges Graffeo, Read, Smith, Pigott and Abdus-Salaam concur.

Order affirmed.

       The Appellate Division vacated defendant’s conviction for assault in the second degree because it was a lesser included offense of assault in the first degree and should have been charged in the alternative to that crime.


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

text:
    [999 NE2d 1157, 977 NYS2d 712]
    The People of the State of New York, Respondent, v Carl D. Wells, Appellant.
    Argued October 10, 2013;
    decided November 14, 2013

      POINTS OF COUNSEL

      Steven Banks, Legal Aid Society, Criminal Appeals Bureau, New York City (Harold V. Ferguson, Jr., of counsel), for appellant.
    The Appellate Division erred when it improperly applied traditional harmless error analysis to appellant’s guilty plea conviction after it had reversed the suppression hearing court’s decision on appeal. (People v Grant, 45 NY2d 366; People v Harris, 48 NY2d 208; People v Burrows, 46 NY2d 957; People v Rodriguez, 99 NY2d 570; People v Sampson, 73 NY2d 908; People v Rolston, 50 NY2d 1048; People v Coles, 62 NY2d 908; People v Purdy, 53 NY2d 806; People v Hill, 9 NY3d 189; People v Catu, 4 NY3d 242.)

      Robert T. Johnson, District Attorney, Bronx (Orrie A. Levy, Megan R. Roberts, Joseph N. Ferdenzi and Nancy Killian of counsel), for respondent.
    The Appellate Division correctly found that the particular circumstances of this case warranted a finding of harmless error. (People v Lloyd, 66 NY2d 964; People v Grant, 45 NY2d 366; People v Catu, 4 NY3d 242; People v Hill, 9 NY3d 189; People v Harris, 48 NY2d 208; People v Purdy, 53 NY2d 806; People v Coles, 62 NY2d 908; People v Cruz, 48 NY2d 419; People v Krause, 71 AD3d 1506; People v McDonald, 27 AD3d 949.)
   OPINION OF THE COURT

Graffeo, J.

People v Grant (45 NY2d 366 [1978]) established that the harmless error doctrine generally cannot be used to uphold a guilty plea that is entered after the improper denial of a suppression motion. People v Lloyd (66 NY2d 964 [1985]), however, recognized that there are exceptions to this principle. In this case, the Appellate Division determined that defendant’s challenge to an inventory search should have been granted but his guilty plea nonetheless was valid under Lloyd. Based on our review of the record and relevant precedent, we disagree and hold that Grant controls in this context.

Defendant crashed a stolen car and the police found him asleep in the driver’s seat. He was visibly inebriated, smelled of alcohol when he exited the vehicle and was arrested for driving while intoxicated. Defendant subsequently failed physical coordination tests and his blood alcohol content was .09%. A crack pipe and an open bottle of rum were found during a search of the automobile. After waiving his Miranda rights, defendant admitted that he had been drinking alcohol “non-stop for days” and smoking cocaine during that time as well.

Defendant moved to suppress the evidence found inside the car, arguing that it was obtained by police during an invalid inventory search. Following an evidentiary hearing, Supreme Court determined that the search was proper and denied the suppression motion. Defendant then informed the court that he wanted to plead guilty to driving while ability impaired because he “was not planning on going to trial if I got a negative ruling” on the motion and “didn’t want to waste the taxpayer’s dollars.” Supreme Court accepted defendant’s guilty plea and imposed the agreed-upon sentence.

The Appellate Division affirmed, concluding that the inventory search was improper but that the erroneous denial of the motion to suppress was harmless due to independent and overwhelming proof of defendant’s guilt (95 AD3d 696 [1st Dept 2012]). A Judge of this Court granted leave to appeal (19 NY3d 1106 [2012]) and we now reverse.

The harmless error rule was “formulated to review trial verdicts” (People v Grant, 45 NY2d at 378). It requires an appellate court to assess the quantum and nature of the People’s proof of guilt independent of erroneously admitted evidence and the causal effect, if any, that the introduction of that evidence had on the factfinder’s verdict (see People v Crimmins, 36 NY2d 230, 240 [1975]). Harmless error therefore can be “difficult to apply to guilty pleas”—especially in cases involving “an improper denial of a pretrial motion to suppress”—since “a defendant’s decision to plead guilty may be based on any factor inside or outside the record” (People v Grant, 45 NY2d at 378-379). Consequently, convictions premised on invalid guilty pleas generally are not amenable to harmless error review (see id.).

The Grant doctrine is not absolute, however, and we have recognized that a guilty plea entered after an improper court ruling may be upheld if there is no “reasonable possibility that the error contributed to the plea” (id. at 379). Although a failure to suppress evidence may detrimentally influence a defendant’s plea negotiations, a concession of guilt may be treated as valid if the defendant articulates a reason for it that is independent of the incorrect preplea court ruling (see id. at 379-380) or an appellate court is satisfied that the decision to accept responsibility “was not influenced” by the error (People v Burrows, 46 NY2d 957, 958 [1979]; see e.g. People v Rolston, 50 NY2d 1048, 1049-1050 [1980]; People v Harris, 48 NY2d 208, 215 [1979]; see generally People v Hill, 9 NY3d 189, 192 [2007], cert denied 553 US 1048 [2008]).

People v Lloyd (66 NY2d 964 [1985]) is a case where harmless error analysis allowed a guilty plea to stand. The defendant accepted a plea bargain before a suppression hearing was held, but the agreement was set aside after the court declined to abide by the sentencing promise. The motion to suppress was later denied and the defendant pleaded guilty again. Although the motion to suppress should have been granted, we nevertheless upheld the conviction because the plea entered prior to the suppression hearing left “no question regarding [the defendant’s] independent motivation” to concede his guilt (id. at 965).

The same cannot be said here. After Supreme Court ruled that the police conducted a valid inventory search of the automobile defendant had been operating, he explained that he hoped to obtain a “positive ruling” on the suppression motion but “was not planning on going to trial if [he] got a negative ruling.” Defendant then admitted that he drove while impaired. Since the Appellate Division determined that defendant was entitled to the “positive ruling” he sought—i.e., suppression of the crack pipe and open bottle of rum that were discovered in the front of the vehicle— his statements to the court indicate that he may not have accepted responsibility if those two items had been excluded as evidence (see People v Grant, 45 NY2d at 379 [the accused “may decide to plead and take an appeal because he believes that he cannot succeed at trial unless certain evidence is suppressed”]). Contrary to the dissent’s claim, therefore, the fact that “the People had other inculpatory evidence [that] could have been used against defendant at a trial” (People v Rolston, 50 NY2d at 1049) is not inherently dispositive under the principles discussed in Grant and Lloyd. Certainly, there may be instances where the failure to grant suppression does not affect a defendant’s decision to plead guilty because the challenged proof is cumulative or too trivial. In this case, however, the denial of the motion to suppress could not be viewed as harmless and the guilty plea must be vacated.

Accordingly, the order of the Appellate Division should be reversed, defendant’s guilty plea vacated and the case remitted to Supreme Court for further proceedings on the complaint.

Pigott, J. (dissenting).

I would affirm. In my view, the Appellate Division correctly applied harmless error analysis to defendant’s guilty plea, because this is a case in which an appellate court can, from the record, “determine whether an erroneous denial of a motion to suppress contributed to the defendant’s decision” to plead guilty (People v Grant, 45 NY2d 366, 379-380 [1978]). Moreover, the Appellate Division correctly ruled that Supreme Court’s error was harmless.

The evidence that Supreme Court failed to suppress—a crack cocaine pipe and an open bottle of rum—was not necessary to prove that defendant was guilty of driving while ability impaired. Even if the search of the stolen car had been suppressed, the People would have been able to introduce at trial the arresting officer’s observations of defendant’s intoxication and his statement to her that he had been smoking cocaine and drinking alcohol “non-stop for days.” It is true that defendant stated that he “was not planning on going to trial if [he] got a negative ruling” at the suppression hearing. But this does not mean that he would have gone to trial if Supreme Court had ruled in his favor with regard to the search of his car, but against him as to his statements to the arresting officer and other evidence of intoxication. It is noteworthy that defendant, during his persistent questioning of the arresting officer at the hearing, did not once ask her about the search of the car or the evidence recovered from it, but rather focused on whether his arrest had been lawful. Therefore, I don’t believe there is a “reasonable possibility” (Grant, 45 NY2d at 379) that if Supreme Court had merely suppressed the search of the car, Wells would have insisted on going to trial.

Accordingly, I respectfully dissent.

Chief Judge Lippman and Judges Read, Smith, Rivera and Abdus-Salaam concur with Judge Graffeo; Judge Pigott dissents and votes to affirm in an opinion.

Order reversed, defendant’s guilty plea vacated and case remitted to Supreme Court, Bronx County, for further proceedings on the complaint.

      . This aspect of the Appellate Division’s decision is not before us and we express no view on its legal propriety.

      . Defendant’s remaining contention lacks merit (see People v Allen, 39 NY2d 916, 917-918 [1976]; People v Roopchand, 65 NY2d 837, 838 [1985], affg 107 AD2d 35 [2d Dept 1985]; Vehicle and Traffic Law § 1193 [1] [c]; cf. People v Hightower, 18 NY3d 249, 253 [2011]; People v Flynn, 79 NY2d 879, 882 [1992]).


author: Smith, J.

text:
    [999 NE2d 1161, 977 NYS2d 716]
    JFK Holding Company LLC et al., Respondents, v City of New York et al., Defendants, and The Salvation Army, Appellant.
    Argued October 16, 2013;
    decided November 14, 2013

      POINTS OF COUNSEL

      Cadwalader, Wickersham & Taft LLP, New York City (Cathy H. Chin and Jared L. Facher of counsel), for appellant.
    I. The limitation of liability provision in the lease requires dismissal of the amended complaint. (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11; P.T. Bank Cent. Asia, N.Y. Branch v ABN AMRO Bank N.V., 301 AD2d 373; Morone v Morone, 50 NY2d 481; Greenfield v Philles Records, 98 NY2d 562; MBIA Ins. Corp. v Patriarch Partners VIII, LLC, 842 F Supp 2d 682; Gold v 29-15 Queens Plaza Realty, LLC, 43 AD3d 866; Drexel Burnham Lambert Group v Vigilant Ins. Co., 157 Misc 2d 198.) II. The relationship between The Salvation Army and the City of New York requires the dismissal of the amended complaint. (Covanta Niagara, L.P. v Town of Amherst Garbage & Refuse Dist. No. 1, 16 Misc 3d 656, 49 AD3d 1295; Stardust Lanes v Metropolis Bowling Ctrs., 35 Misc 2d 291; Pensee Assoc. v Quon Indus., 241 AD2d 354; Wen Kroy Realty Co. v Public Natl. Bank & Trust Co., 260 NY 84; Standard Bldrs. Supplies v Gush, 206 AD2d 720; Riverside Research Inst. v KMGA, Inc., 108 AD2d 365, 68 NY2d 689; Guardian Life Ins. Co. of Am. v Chemical Bank, 94 NY2d 418; William Stevens, Ltd. v Kings Vil. Corp., 234 AD2d 287; Savoy Record Co. v Cardinal Export Corp., 15 NY2d 1; Ell Dee Clothing Co. v Marsh, 247 NY 392.)

      Kasowitz, Benson, Torres & Friedman LLP, New York City (Jennifer S. Recine and Michael J. Bowe of counsel), for respondents.
    I. The limitation of liability does not apply because The Salvation Army failed to act in a commercially reasonable manner. (Slatt v Slatt, 64 NY2d 966, 65 NY2d 785; Riverside S. Planning Corp. v CRP/Extell Riverside, L.P., 60 AD3d 61; R/S Assoc. v New York Job Dev. Auth., 98 NY2d 29, 98 NY2d 693; W.W.W. Assoc. v Giancontieri, 77 NY2d 157; Beal Sav. Bank v Sommer, 8 NY3d 318; MBIA Ins. Corp. v Patriarch Partners VIII, LLC, 842 F Supp 2d 682; EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11; Prudential-Bache Sec. v Citibank, 73 NY2d 263; Campaign for Fiscal Equity v State of New York, 86 NY2d 307; Sirlin Plumbing Co. v Maple Hill Homes, 21 NY2d 831.) II. At best, the lease and related services agreement are ambiguous, precluding dismissal. (Zuckerwise v Sorceron Inc., 289 AD2d 114; Information Superhighway, Inc. v Talk Am., Inc., 274 F Supp 2d 466; Federal Ins. Co. v Americas Ins. Co., 258 AD2d 39; Bianculli v Bianculli, 242 AD2d 647; Friedman v Smithfield, Inc., 146 AD2d 567; JP Morgan Chase Bank, N.A. v Cellpoint Inc., 54 AD3d 366; Amusement Bus. Underwriters v American Intl. Group, 66 NY2d 878.) III. Plaintiffs have properly stated a cause of action for breach of the implied covenant of good faith and fair dealing. (Plant City Steel Corp. v National Mach. Exch., 23 NY2d 472; Cohn v Lionel Corp., 21 NY2d 559; Citi Mgt. Group, Ltd. v Highbridge House Ogden, LLC, 45 AD3d 487; Maddaloni Jewelers, Inc. v Rolex Watch U.S.A., Inc., 41 AD3d 269; Gross v Empire Healthchoice Assur., Inc., 16 Misc 3d 1112[A], 2007 NY Slip Op 51390[U].) IV The Salvation Army’s relationship with the City does not require dismissal. (Sorenson v Bridge Capital Corp., 52 AD3d 265; Stardust Lanes v Metropolis Bowling Ctrs., 35 Misc 2d 291; Resurgent Capital Servs., LLC v Mackey, 32 Misc 3d 265; James McKinney & Son v Lake Placid 1980 Olympic Games, 61 NY2d 836; Covanta Niagara, L.P. v Town of Amherst Garbage & Refuse Dist. No. 1, 16 Misc 3d 656; Matter of State of New York v Town of Hardenburgh, 273 AD2d 769; State of New York v Schenectady Chems., 117 Misc 2d 960; Coastal Commercial Corp. v Kosoff & Sons, 10 AD2d 372; Matter of Jones, 48 Misc 2d 358; Energycresent, Inc. v Creative Modules Enters., 183 AD2d 804; Lukowsky v Shalit, 110 AD2d 563.)
   OPINION OF THE COURT

Smith, J.

Plaintiffs leased a building to The Salvation Army, which operated it as a homeless shelter under an agreement with the City of New York. The lease was terminated, and plaintiffs now seek damages from The Salvation Army, claiming that the leased premises were returned in bad condition. We hold that plaintiffs’ claim is barred by the plain language of the Lease.

I

The two plaintiffs are related entities; to simplify discussion, we ignore the distinctions between them. They own a building in Queens formerly known as the Carlton House Hotel. They allege that in 2002, the City entered into discussions with them about using the building as a homeless shelter. Plaintiffs also allege that “for political reasons” the City preferred not to rent the building itself, but to make The Salvation Army, which would operate the homeless shelter, the tenant. Later in 2002, a deal was struck in which plaintiffs and The Salvation Army entered into a Lease, and The Salvation Army entered into a Services Agreement with the City. The Services Agreement required the City to make payments to The Salvation Army that would be at least enough to cover The Salvation Army’s obligations to plaintiffs under the Lease.

The Lease reflected the understanding of the parties that The Salvation Army was essentially an intermediary between plaintiffs and the City. For purposes of this case, the key provision of the Lease is Paragraph 31, captioned “Services Agreement,” which says in relevant part:

“Notwithstanding anything to the contrary set forth in this Lease, (i) the parties acknowledge that Tenant [The Salvation Army] is entering into this Lease solely in order to enable Tenant to fulfill its obligations to the [City] under the Services Agreement and (ii) Landlord agrees that . . . Tenant shall only be liable for Base Rent... or other payments under this Lease, including without limitation . . . damages for breaches of any covenant under this Lease . . . solely to the extent of the amounts paid to Tenant from time to time under the Services Agreement or otherwise in connection with the use of the Leased Premises.”

In short, The Salvation Army was not obligated to pay plaintiffs any more than the City paid to The Salvation Army. However, Paragraph 31 requires The Salvation Army to “use commercially reasonable efforts to enforce its rights against the [City] under the Services Agreement or otherwise.”

The Lease also provided, in Paragraph 32, that, if the City terminated the Services Agreement, The Salvation Army could terminate the Lease upon payment to plaintiffs of a termination fee, and the Services Agreement required the City to supply to The Salvation Army the money necessary to pay the fee. Paragraph 32 of the Lease added that it would be a “condition precedent to the effectiveness of any such termination” that The Salvation Army “deliver vacant possession of the Leased Premises to Landlord in accordance with Paragraph 23 of this Lease.” Paragraph 23 required, among other things, that The Salvation Army “leave and surrender the Leased Premises . . . in the same condition in which the Leased Premises was at the commencement of this Lease.”

In 2005, the City terminated the Services Agreement, and The Salvation Army in turn terminated the Lease. According to plaintiffs, however, The Salvation Army did not comply with the requirement of Paragraph 23 that the premises be returned in their original condition. Plaintiffs allege that the building is in “extreme disrepair” and that its restoration will cost $200 million. If this allegation is true, it seems clear that plaintiffs were not required, under Paragraph 32, to accept the termination of the Lease; they could have insisted that the Lease remain in force, and that The Salvation Army continue to pay rent, until the building was fixed. It is undisputed, however, that plaintiffs accepted the $10 million termination fee payment called for by the Lease. Plaintiffs do not assert that the termination of the Lease was ineffective.

Plaintiffs bring this action to collect damages for the alleged injury to their building. The action was originally brought against the City, but plaintiffs’ claims against the City have been dismissed, and are not now before us. The Salvation Army was later added as a defendant, and plaintiffs pleaded claims against it for breach of contract and for breach of an implied covenant of good faith and fair dealing. Supreme Court dismissed both claims (2010 NY Slip Op 32894[U] [2010]), but the Appellate Division, with two Justices dissenting, modified to reinstate the breach of contract cause of action (JFK Holding Co. LLC v City of New York, 98 AD3d 273 [1st Dept 2012]).

The Appellate Division majority concluded that plaintiffs had adequately pleaded a breach of the Lease, emphasizing The Salvation Army’s obligation to “use commercially reasonable efforts” to enforce its rights against the City (id. at 276-278). The majority held, however, that the claim for breach of the covenant of good faith and fair dealing was properly dismissed (id. at 278). The dissenters would have held that plaintiffs had no claim against The Salvation Army. In the dissenters’ view, the “commercially reasonable efforts” clause “does not apply here because the Salvation Army did not have any right to recover posttermination restoration costs” from the City (id. at 280 [Freedman, J., dissenting]).

The Appellate Division granted leave to appeal, certifying to us the question of whether its order was properly made. We answer the question in the negative and reverse. Plaintiffs did not seek leave to cross-appeal from the Appellate Division’s affirmance of the order dismissing their claim for breach of the covenant of good faith and fair dealing, and we therefore do not consider their arguments in support of that claim.

II

The chief issue between the parties, and the issue that divided the Appellate Division Justices, is a narrow one. The Lease is clear that, as a general proposition, The Salvation Army is not obliged to pay more to plaintiffs than it can recover from the City, and it is equally clear that The Salvation Army must do what it reasonably can to recover what the City owes it. If The Salvation Army breached its duty to use commercially reasonable efforts to enforce a City obligation, it could not rely on the City’s nonpayment of that obligation to defeat plaintiffs’ claim. We agree with the Appellate Division dissenters, however, that the complaint fails to allege any commercially reasonable step that The Salvation Army should have taken to recover money from the City.

Plaintiffs do not identify any provision of the Services Agreement under which the City owes money to The Salvation Army that The Salvation Army failed to collect. The provision in the Services Agreement the plaintiffs rely on most heavily is Article

6.1 (C), which says that The Salvation Army and the City “shall review annually the amount of payments made pursuant to this Agreement to determine the appropriateness of the rates.” Plaintiffs’ theory is that, because of the bad condition of the property, the amounts paid by the City to The Salvation Army should have been increased. But it requires considerable strain on the language of the Services Agreement to argue that Article

6.1 (C) gave The Salvation Army a right of action against the City on the present facts. It was commercially reasonable for The Salvation Army to think that it was unlikely to recover more than the City had paid it.

Since plaintiffs have not sufficiently alleged that The Salvation Army breached the “commercially reasonable efforts” clause in Paragraph 31 of the Lease, the limitation of liability in the same paragraph bars this action. Plaintiffs complain that this result subjects them to a hardship, but if it does, it is a hardship they might have avoided. As we mentioned earlier, if the allegations of the complaint are true, plaintiffs could have rejected The Salvation Army’s termination of the Lease and continued collecting rent until the building was restored to its original condition—but that would have required plaintiffs to reject the proffered $10 million termination fee. Having chosen to take the money, plaintiffs have no further remedy under the Lease.

Accordingly, the order of the Appellate Division should be reversed with costs, the amended complaint dismissed as against The Salvation Army, and the certified question answered in the negative.

Chief Judge Lippman and Judges Graffeo, Read, Pigott and Abdus-Salaam concur; Judge Rivera taking no part.

Order reversed, with costs, the amended complaint dismissed as against defendant The Salvation Army and certified question answered in the negative.


text:
    [999 NE2d 1164, 977 NYS2d 719]
    Rocky Point Drive-In, L.P., Appellant, v Town of Brookhaven et al., Respondents.
    Argued October 16, 2013;
    decided November 14, 2013

      POINTS OF COUNSEL

      Bracken Margolin Besunder LLP, Islandia (Linda U. Margolin of counsel), for appellant.
    I. The Appellate Division erred as a matter of law by holding that plaintiff had to prove malicious delay in order to be entitled to special facts relief. (Matter of Alscot Inv. Corp. v Incorporated Vil. of Rockville Ctr., 99 AD2d 754, 64 NY2d 921; Matter of Fairchild Sons, Inc. v Rogers, 242 App Div 651, 266 NY 460; Matter of Dubow v Ross, 254 App Div 706; Matter of Our Lady of Good Counsel R.C. Church & School v Ball, 45 AD2d 66, 38 NY2d 780; Matter of Pokoik v Silsdorf, 40 NY2d 769; Matter of Amsterdam-Manhattan Assoc. v Joy, 42 NY2d 941; Matter of Faymor Dev. Co. v Board of Stds. & Appeals of City of N.Y., 45 NY2d 560; Matter of Greco v Trincellito, 206 AD2d 779; Matter of Lawrence School Corp. v Morris, 167 AD2d 467; Matter of Eckstein v Glimm, 84 AD2d 839.) II. Plaintiff proved bad faith and selective enforcement by the Town of Brookhaven by legally sufficient and overwhelming record evidence. (People v Rodriguez, 17 NY3d 486; People v Samuels, 99 NY2d 20; People v Bracey, 41 NY2d 296; Matter of Miller v Southold Town, 190 AD2d 672; Bower Assoc. v Town of Pleasant Val., 2 NY3d 617; Penlyn Dev. Corp. v Incorporated Vil. of Lloyd Harbor, 51 F Supp 2d 255; Masi Mgt. v Town of Ogden, 273 AD2d 837; Matter of 303 W. 42nd St. Corp. v Klein, 46 NY2d 686; Gomillion v Lightfoot, 364 US 339; Yick Wo v Hopkins, 118 US 356.) III. The ruling in WF Shirley, L.L.C. v Board of Zoning Appeals of Town of Brookhaven (Sup Ct, Suffolk County, Sept. 12, 2001, Costello, J., index No. 01-9523) establishes that Rocky Point Drive-In, L.P’s proposed use was as-of-right in the J-2 zone. (Matter of Juan C. v Cortines, 89 NY2d 659; Pratt v State of New York, 181 Misc 2d 488; Buechel v Bain, 97 NY2d 295, 535 US 1096.)

      Jaspan Schlesinger LLP, Garden City (Maureen T. Liccione and Robert V. Guido of counsel), and Annette Eaderesto, Town Attorney, Farmingville, for respondents.
    I. The trial evidence did not establish facts sufficient for application of the special facts exception. (Matter of Alscot Inv. Corp. v Incorporated Vil. of Rockville Ctr., 99 AD2d 754, 64 NY2d 921; Matter of Mascony Transp. & Ferry Serv. v Richmond, 71 AD2d 896, 49 NY2d 969;
      Matter of Pokoik v Silsdorf, 40 NY2d 769; Matter of Demisay, Inc. v Petito, 31 NY2d 896; Town of Orangetown v Magee, 88 NY2d 41; Matter of Ellington Constr. Corp. v Zoning Bd. of Appeals of Inc. Vil. of New Hempstead, 77 NY2d 114; Matter of Faymor Dev. Co. v Board of Stds. & Appeals of City of N.Y., 45 NY2d 560; Matter of Jamaica Recycling Corp. v City of New York, 38 AD3d 398, 9 NY3d 801; Matter of c/o Hamptons, LLC v Rickenbach, 98 AD3d 736; Matter of Alfano v Zoning Bd. of Appeals of Vil. of Farmingdale, 74 AD3d 961.) II. Appellant failed to prove an entitlement to a commercial center use under the prior J-2 zoning classification. (Matter of Twin County Recycling Corp. v Yevoli, 90 NY2d 1000; Matter of Khan v Zoning Bd. of Appeals of Vil. of Irvington, 87 NY2d 344; Matter of Fuhst v Foley, 45 NY2d 441; Conley v Town of Brookhaven Zoning Bd. of Appeals, 40 NY2d 309; Matter of Southern Dutchess Country Club v Town Bd. of Town of Fishkill, 18 NY2d 870; Matter of Neddo v Schrade, 270 NY 97; Preble Aggregate v Town of Preble, 263 AD2d 849; Matter of Aho, 39 NY2d 241; Matter of Hillowitz, 20 NY2d 952.) III. The WF Shirley, L.L.C. v Board of Zoning Appeals of Town of Brookhaven (Sup Ct, Suffolk County, Sept. 12, 2001, Costello, J, index No. 01-9523) Supreme Court order did not establish an entitlement to a commercial center in the J-2 zone. (Ryan v New York Tel. Co., 62 NY2d 494; Kaufman v Eli Lilly & Co., 65 NY2d 449; Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481; Robinson Motor Xpress, Inc. v HSBC Bank, USA, 37 AD3d 117; People ex rel. Metropolitan St. Ry. Co. v State Bd. of Tax Commrs., 174 NY 417, 199 US 1; Race v Krum, 222 NY 410.) IV There was no proof of undue delay. (Matter of Eadie v Town Bd. of Town of N. Greenbush, 7 NY3d 306; Matter of Jackson v New York State Urban Dev. Corp., 67 NY2d 400.) V. The Town of Brookhaven’s actions were not malicious or in bad faith. VI. Proof of negligence would have been insufficient to satisfy the special facts exception. (Saratoga County Chamber of Commerce v Pataki, 100 NY2d 801, 540 US 1017; Matter of Pokoik v Silsdorf, 40 NY2d 769; Matter of Golisano v Town Bd. of Town of Macedon, 31 AD2d 85; Marsh v Town of Huntington, 39 AD2d 945; Matter of Dubow v Ross, 254 App Div 706; Matter of c/o Hamptons, LLC v Rickenbach, 98 AD3d 736; Matter of Alfano v Zoning Bd. of Appeals of Vil. of Farmingdale, 74 AD3d 961; Matter of Golden Horizon Terryville Corp. v Prusinowski, 63 AD3d 930; Matter of Mamaroneck Beach & Yacht Club, Inc. v Zoning Bd. of Appeals of Vil. of Mamaroneck, 53 AD3d 494; Figgie Intl. v Town of Huntington, 203 AD2d 416.) VII. The applicant failed to meet its heavy burden to prove selective enforcement. (Matter of 303 W. 42nd St. Corp. v Klein, 46 NY2d 686; Yick Wo v Hopkins, 118 US 356; Bower Assoc. v Town of Pleasant Val., 2 NY3d 617; Town of Plattekill v Dutchess Sanitation, 56 AD2d 150, 43 NY2d 662; Matter of Indelicato v Town of Lloyd, 34 AD3d 1056, 8 NY3d 935; Becker v Koch, 104 NY 394; Fox v Tedesco, 15 AD3d 538; Ferri v Ferri, 60 AD3d 625; People v Gonzalez, 68 NY2d 424.) VIII. The adoption of a negligence standard would not be sound public policy. (Tilles Inv. Co. v Town of Huntington, 74 NY2d 885; Matter of Town of Islip v Caviglia, 73 NY2d 544; Robert E. Kurzius, Inc. v Incorporated Vil. of Upper Brookville, 51 NY2d 338; Sag Harbor Port Assoc. v Village of Sag Harbor, 21 F Supp 2d 179; Elias v Town of Brookhaven, 783 F Supp 758; Matter of E.F.S. Ventures Corp. v Foster, 71 NY2d 359; Matter of Parkview Assoc. v City of New York, 71 NY2d 274, 995, 488 US 801; Morley v Arricale, 66 NY2d 665; City of Yonkers v Rentways, Inc., 304 NY 499; Matter of Rudolf Steiner Fellowship Found. v De Luccia, 90 NY2d 453.)

      Davis & Prager, P.C., Patchogue (Larry Ray Davis of counsel), for Long Island Builders Institute, Inc., amicus curiae.
    No proof of malice should be necessary to entitle plaintiff to special facts relief. (Matter of East End Resources, LLC v Town of Southold Planning Bd., 81 AD3d 947; Matter of United Water New Rochelle, Inc. v King, 18 AD3d 763, 5 NY3d 711; Matter of Amsterdam-Manhattan Assoc. v Joy, 42 NY2d 941; Matter of Pokoik v Silsdorf, 40 NY2d 769; Matter of Our Lady of Good Counsel R.C. Church & School v Ball, 45 AD2d 66, 38 NY2d 780.)

      Sarah Brancatella, Albany, for Association of Towns of the State of New York, amicus curiae.
    I. Expanding the special facts exception to include negligence disrupts the balance of public and private interests. (Village of Euclid v Ambler Realty Co., 272 US 365; Rodgers v Village of Tarrytown, 302 NY 115; Glacial Aggregates LLC v Town of Yorkshire, 14 NY3d 127; Town of Orangetown v Magee, 88 NY2d 41; Matter of Alscot Inv. Corp. v Incorporated Vil. of Rockville Ctr., 64 NY2d 921.) II. Adding negligence to the special facts exception unduly complicates a straightforward rule of law. (Elliott v City of New York, 95 NY2d 730; Nicholson v South Oaks Hosp., 27 AD3d 628; Matter of Biedermann v Town of Orangetown, 125 AD2d 465; Hey v Town Bd. of Town of Potter, 117 AD2d 989; Benigno v Cohalan, 40 NY2d 880.) III. Other policy reasons favor limiting the application of the special facts exception. (Matter of Cave v Zoning Bd. of Appeals of Vil. of Fredonia, 49 AD2d 228;
      Matter of Harbison v City of Buffalo, 4 NY2d 553; Matter of Aboud v Wallace, 94 AD2d 874.)
   OPINION OF THE COURT

Rivera, J.

Rocky Point Drive-In, L.P (Rocky Point), a landowner seeking to develop property located in the Town of Brookhaven (Town), appeals an order of the Appellate Division which reversed a declaratory judgment of the Supreme Court on the law and facts, and which determined that Rocky Point’s site plan application should not be reviewed under a former, more favorable, zoning provision. We find no basis to overturn the Appellate Division’s order and affirm.

Rocky Point owns a parcel of land approximating 17 acres (the parcel) in the Town. Over several years Rocky Point, and its predecessor in interest, Sans Argent, Inc. (Sans Argent), have tried unsuccessfully to secure approval from the Town to develop this parcel as a site for a 152,050-square-foot Lowe’s Home Improvement Center (Lowe’s Center).

The factual history is extensive but, as relevant here, ostensibly begins in 1997, when the Town adopted a comprehensive plan creating a new “commercial recreation” (CR) zoning classification. The plan cited the desire to draw visitors, and the potential to “attract new types of private recreation such as sports complexes, amusement and theme parks, movie theme parks, ice hockey and ice skating rinks.” The parcel had been zoned as “J Business 2” (J-2), which permitted retail stores as of right, but did not permit “commercial centers” which were defined by Brookhaven Town Code as “[a]ny building or buildings . . . used by one (1) or more enterprises for a commercial purpose . . . where the proposed use occupies a site of five (5) acres or more.” Accordingly, all of the parcel’s previous uses—a drive-in movie theater and golf driving range—were nonconforming. Although the plan did not target the parcel, the parcel’s previous uses would have been brought into compliance if it was rezoned to CR.

The Town had not taken any measures in pursuance of the CR classification, as per the comprehensive plan, until February 2000, when the Brookhaven Town Board (Board) discussed, for the first time, specifically rezoning the subject parcel to CR. The Board announced a date for a public meeting to be held on the issue. Shortly before the hearing, on March 2, 2000, Sans Argent submitted a site plan application to the Town for the Lowe’s Center to be built on the parcel. The proposed Lowe’s Center would not have complied with the CR zone classification. The Board thereafter held a public hearing to vote to rezone the subject property to CR. Sans Argent, aware of the impending vote, and seeking to avoid the rezoning, submitted a protest, triggering Town Law § 265 and its requirement that the zoning change pass by a supermajority vote. Five of the seven Board members voted to rezone, thus falling short of the supermajority requirement. Nevertheless, the Town declared the parcel rezoned to CR and declined to continue processing Sans Argent’s application.

Sans Argent then filed suit in Supreme Court, Suffolk County, challenging the Board’s rezoning as invalid. While the suit was pending, the parties entered into an agreement under which respondents would continue processing Sans Argent’s application if Sans Argent submitted a new site plan with an accompanying application for a use variance to the Zoning Board of Appeals (ZBA).

Respondents issued a notice of violation and on December 1, 2000, Sans Argent submitted a new site plan and application for a use variance. A few months later, in March, Supreme Court held null and void the Town’s rezoning of the parcel, for failure to secure the requisite supermajority vote.

Shortly thereafter, the Town Board adopted a second resolution that rezoned the parcel to CR—again without the requisite supermajority. Sans Argent challenged this vote, and after commencement of a second action, Supreme Court declared the second rezoning null and void. In June 2002, the Town Board amended the Brookhaven Town Code to allow for a simple majority vote of approval over protests for rezoning of property, rather than a supermajority vote. Then, in October 2002, the Town adopted a resolution, for the third time, rezoning the parcel to CR.

Rocky Point, as the successor in interest to Sans Argent, filed the instant action seeking a judgment declaring that the site plan application was subject to review under the previous J-2 zoning classification because the Town had unduly delayed the review of the application. In 2004, Supreme Court granted the Town summary judgment, and the Appellate Division, Second Department, reversed, finding that triable issues of fact existed as to whether special facts warranted application of the J-2 zoning classification, and concluding that there was proof indicating selective enforcement of the Town’s zoning provision (37 AD3d 805 [2d Dept 2007]).

At a non-jury trial, Rocky Point introduced several various site plan applications submitted to the Town between 1986 and 2003. All, it claimed, proved the Town was selectively enforcing the CR classification. Supreme Court agreed that the Town treated Rocky Point’s application differently from other applications, and that there was significant delay in the process. Therefore, special facts warranted the application of the previous J-2 zoning classification to Rocky Point’s application. The Town appealed and the Second Department reversed, finding Supreme Court’s determinations were not supported by the evidence adduced at trial (93 AD3d 653, 654 [2d Dept 2012]). We granted Rocky Point leave to appeal (19 NY3d 815 [2012]) and now affirm.

As a general matter, a case must be decided upon the law as it exists at the time of the decision (see Matter of Pokoik v Silsdorf, 40 NY2d 769, 772 [1976]). In land use cases, the law in effect when the application is decided applies, regardless of any intervening amendments to the zoning law (id. at 773). Rocky Point seeks to avoid this rule and have the zoning law in effect at the time it submitted its application apply to its request, arguing it falls within the “special facts” exception to the general time of decision rule.

Under the special facts exception, where the landowner establishes entitlement as a matter of right to the underlying land use application—here, a “site plan”—the application is determined under the zoning law in effect at the time the application is submitted (id. at 772, citing Matter of Boardwalk & Seashore Corp. v Murdock, 286 NY 494 [1941], and Matter of Rosano v Town Bd. of Town of Riverhead, 43 AD2d 728 [2d Dept 1973]). In order for a landowner to establish entitlement to the request as a matter of right, the landowner must be in “full compliance with the requirements at the time of the application,” such that “proper action upon the permit would have given [the landowner] time to acquire a vested right” (Pokoik, 40 NY2d at 773, citing Marsh v Town of Huntington, 39 AD2d 945 [2d Dept 1972], and Matter of Golisano v Town Bd. of Town of Macedon, 31 AD2d 85 [4th Dept 1968]). In addition to showing entitlement to the request as a matter of right, the landowner must also show “extensive delay[ ] indicative of bad faith” (Matter of Alscot Inv. Corp. v Incorporated Vil. of Rockville Ctr., 64 NY2d 921, 922 [1985]), “unjustifiable actions” by the municipal officials (Pokoik, 40 NY2d at 773), or “abuse of administrative procedures” (id. [“the village improperly delayed reviewing the application and the board presented unsatisfactory reasons for denial, resulting in the disregard of petitioner’s rights”]).

As the record establishes, Rocky Point fails to meet the threshold requirement that it was entitled to the requested land use permit under the law as it existed when it filed its application. Rocky Point does not dispute—and it cannot—that it was out of compliance with the zoning classification in effect when it submitted the application. At that time, a substantial portion of the parcel was zoned J-2, which did not permit “commercial centers” of the type Rocky Point sought to build. That is, J-2 prohibited commercial buildings that “occup[y] a site of five (5) acres or more.” The proposed Lowe’s Center, as planned, exceeded this spatial limit.

Rocky Point argues that the special facts exception should apply to its case even though it does not technically meet the J-2 requirements as of right, because the Town historically ignored the zoning requirements. According to Rocky Point, the Town targeted Rocky Point for selective enforcement, seeking to subject Rocky Point to the zoning requirements while intentionally failing to impose them on similarly situated applicants. Rocky Point argues, therefore, it should not be held to the strict language of the zoning requirements.

The Appellate Division rejected this claim, based on a lack of factual support in the record (93 AD3d at 654). When the Appellate Division decides that a factual finding is against the weight of the evidence, that is itself a new finding of fact (Cohen v Hallmark Cards, 45 NY2d 493, 498 [1978]). In such case, our review of the Appellate Division’s decision is limited; we review the record to determine which factual findings “more nearly comport with the weight of the evidence” (Matter of State of New York v Daniel F., 19 NY3d 1086, 1087 [2012]).

The Appellate Division, reviewing the facts, disagreed with the Supreme Court’s conclusion that “[respondents] intentionally and in bad faith delayed processing [Rocky Point’s] site plan application, and selectively enforced the prohibition against commercial centers in a J-2 zoning district against [Rocky Point]” (93 AD3d at 654). The record clearly demonstrates that similarly situated applicants referred to by Rocky Point were not similarly situated at all; they either fell within an exception or were within compliance with the J-2 zoning classification. Thus, the Appellate Division’s finding more nearly comports with the weight of the evidence.

Rocky Point also argues that the Appellate Division erred when it applied a “bad faith” requirement rather than a negligence standard to its claim. In support of this argument Rocky Point asserts that we have previously held that negligence may trigger application of the special facts exception. Rocky Point places significant reliance on our decision in Matter of Faymor Dev. Co. v Board of Stds. & Appeals of City of N.Y. in support of its argument. In Faymor the applicant would have had, in the absence of municipal wrongdoing, a vested right (45 NY2d 560, 566 [1978]). Here, as Rocky Point concedes, it cannot meet the zoning requirements and did not have a vested right. Rocky Point has failed to meet the threshold requirement of entitlement as of right, and we have no reason to upset the Appellate Division’s factual findings of a lack of record support for selective enforcement by the Town, because the special facts exception is inapplicable to this case, under any standard.

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

Chief Judge Lippman and Judges Graffeo, Read, Smith, Pigott and Abdus-Salaam concur.

Order affirmed, with costs.

      . Zoning laws must be enacted in accordance with a comprehensive land use plan (see Town Law § 263; Asian Ams. for Equality v Koch, 72 NY2d 121, 131 [1988]). “The requirement of a comprehensive . . . plan not only insures that local authorities act for the benefit of the community as a whole but protects individuals from arbitrary restrictions on the use of their land” (id.). Essentially, this requirement acknowledges that “consideration must be given to the needs of the community as a whole” (Udell v Haas, 21 NY2d 463, 469 [1968]).

      . Town Law § 265 (1) reads, in pertinent part: “except that any such amendment shall require the approval of at least three-fourths of the members of the town board in the event such amendment is the subject of a written protest.”

      . Five members voted in favor, one in opposition and one recused himself.