author: CIPARICK, J. G.B. Smith, J.

text:
    [807 NE2d 254, 775 NYS2d 205]
    Andrea Collier, as Parent and Natural Guardian for Matthew Collier, an Infant, Appellant, v Charles Zambito et al., Respondents.
    Argued January 8, 2004;
    decided February 17, 2004

      POINTS OF COUNSEL

      Karpinski, Stapleton, Galbato & Tehan, EC., Auburn {David G. Tehan of counsel), for appellant.
    The Appellate Division erred in ruling that plaintiff failed to raise an issue of fact as to whether defendants knew or should have known of the dog’s vicious propensities. (Cullipher v Traffic Markings, 259 AD2d 992; Silliman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Andre v Pomeroy, 35 NY2d 361; St. Paul Indus. Park v New York State Urban Dev. Corp., 63 AD2d 822; Robinson v Strong Mem. Hosp., 98 AD2d 976; Plennert v Abel, 269 AD2d 796; Smith v Farner, 229 AD2d 1017; Rider v White, 65 NY 54; GTF Mktg. v Colonial Aluminum Sales, 66 NY2d 965; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851.)

      Williamson, Clune & Stevens, Ithaca {Allan C. VanDeMark of counsel), for respondents.
    The Appellate Division, Fourth Judicial Department, correctly ruled that as there was no evidence that defendants’ dog had a propensity to bite and as defendants had no knowledge that their dog had vicious propensities, there can be no liability. (Plennert v Abel, 269 AD2d 796; Smith v Farner, 229 AD2d 1017; Elmore v Wukovits, 288 AD2d 875; Shannon v Schultz, 259 AD2d 937; Roupp v Conrad, 287 AD2d 937; Wilson v Livingston, 305 AD2d 585; Altmann v Emigrant Sav. Bank, 249 AD2d 67; Mitura v Roy, 174 AD2d 1020; Gill v Welch, 136 AD2d 940; Fontanas v Wilson, 300 AD2d 808.)
   OPINION OF THE COURT

CIPARICK, J.

Defendants Charles and Mary Zambito own Cecil, a beagle-collie-rottweiler mixed breed dog that they keep as a family pet. Defendants customarily confined Cecil to the kitchen area, behind a gate, when they were away from home and when visitors came, because he would bark. On the night of December 31, 1998, 12-year-old Matthew Collier was a guest of the defendants’ son, Daniel. He had been to the defendants’ home on several previous occasions, and on that evening had been upstairs with Daniel and several other children. When Matthew came downstairs to use the bathroom, the dog began to bark. Mary Zambito placed Cecil on a leash and, when Matthew emerged from the bathroom, invited him to approach to allow the dog to smell him, as the dog knew him from prior visits. As the boy approached, Cecil lunged and bit Matthew’s face. There is no dispute that the dog’s attack was unprovoked. The parties testified at their examinations before trial that, to their knowledge, Cecil had never previously threatened or bitten anyone.

At Supreme Court, defendants moved for summary judgment to dismiss plaintiffs complaint for failure to state a cause of action. Specifically, defendants argued that plaintiff did not demonstrate that the dog had vicious propensities or that the defendants knew or should have known of the dog’s alleged vicious propensities. Plaintiff cross-moved for summary judgment on the issue of liability. Supreme Court denied both motions, finding that plaintiff established an issue of fact as to whether the defendants knew or should have known of Cecil’s alleged vicious propensities. The court held that defendants’ implied knowledge of such propensities could be inferred by defendants’ confinement of Cecil in the kitchen.

The Appellate Division reversed, on the law, finding that plaintiff failed to raise an issue of fact as to whether the defendants were aware or should have been aware of their dog’s alleged vicious propensities (299 AD2d 866 [2002]). The Court further found no evidence that Cecil actually had vicious propensities of the type that resulted in Matthew’s injury. Two Justices dissented and would have voted to affirm, finding that plaintiff raised an issue of fact as to “whether defendants knew or should have known of Cecil’s dangerous propensities and, if so, whether defendant was negligent in initiating the contact between plaintiffs son and Cecil” (299 AD2d at 868). We now affirm.

Discussion

For at least 188 years (see e.g. Vrooman v Lawyer, 13 Johns 339 [1816]), the law of this state has been that the owner of a domestic animal who either knows or should have known of that animal’s vicious propensities will be held liable for the harm the animal causes as a result of those propensities (see Hosmer v Carney, 228 NY 73, 75 [1920]; see also Restatement [Second] of Torts § 509). Vicious propensities include the “propensity to do any act that might endanger the safety of the persons and property of others in a given situation” (Dickson v McCoy, 39 NY 400, 403 [1868]).

Knowledge of vicious propensities may of course be established by proof of prior acts of a similar kind of which the owner had notice (see Benoit v Troy & Lansingburgh R.R. Co., 154 NY 223, 225 [1897]; see also 5A-5 Warren, Negligence in New York Courts § 5.04 [6] [2003]). In addition, a triable issue of fact as to knowledge of a dog’s vicious propensities might be raised—even in the absence of proof that the dog had actually bitten someone—by evidence that it had been known to growl, snap or bare its teeth. Also potentially relevant is whether the owner chose to restrain the dog, and the manner in which the dog was restrained (see Hahnke v Friederich, 140 NY 224, 226 [1893]; see also Rider v White, 65 NY 54, 55-56 [1875]). The keeping of a dog as a guard dog may give rise to an inference that an owner had knowledge of the dog’s vicious propensities (see Hahnke, 140 NY at 227).

In addition, an animal that behaves in a manner that would not necessarily be considered dangerous or ferocious, but nevertheless reflects a proclivity to act in a way that puts others at risk of harm, can be found to have vicious propensities—albeit only when such proclivity results in the injury giving rise to the lawsuit. But nothing in our case law suggests that the mere fact that a dog was kept enclosed or chained or that a dog previously barked at people is sufficient to raise a triable issue of fact as to whether it had vicious propensities.

The evidence submitted by plaintiff was simply insufficient to raise an issue of fact as to whether Cecil had vicious propensities that were known, or should have been known, to defendants. Cecil was kept as a family pet, not as a guard dog. Although the dog was restricted to the kitchen area, uncontroverted deposition testimony indicated that he was confined only because he would bark when guests were at the house. There was no evidence that Cecil was confined because the owners feared he would do any harm to their visitors. There was no evidence that the dog’s behavior was ever threatening or menacing. Indeed, the dog’s actions—barking and running around—are consistent with normal canine behavior. Barking and running around are what dogs do.

The infant plaintiff testified that he had met Cecil on previous occasions and was not afraid of the dog. Although he testified that Cecil was “[v]ery wild” when he had seen the dog on those previous occasions, he later clarified that what he meant was that the dog “[r]uns around a lot, . . . [and has] a lot of energy.” The parties were also unaware of any prior incidents in which the dog had attempted to bite or attack anyone, and defendants had received no previous complaints about the dog’s behavior. Plaintiff herself testified that Cecil had always been “friendly.” The fact that the owner invited Matthew to approach the dog would seem to demonstrate that she did not conceive of the possibility that the dog would attack the boy.

Finally, plaintiffs are not unduly burdened by the requirement of proof that a defendant know or should know of an animal’s vicious propensities. Once such knowledge is established, an owner faces strict liability for the harm the animal causes as a result of those propensities (see Strunk v Zoltanski, 62 NY2d 572, 575-576 [1984]). This disposition does not entitle dog owners to an automatic “one free bite.” There could certainly be circumstances where, although a dog has not yet bitten a person, its vicious nature is apparent. In that situation, the owner’s success in keeping the dog confined or restrained in the past would not insulate the owner from liability. The behavior exhibited by Cecil in this particular case simply does not rise to that level and summary judgment was properly granted dismissing the complaint.

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

G.B. Smith, J.

(dissenting). Because a question of fact exists as to whether defendants knew or should have known of the potential of the dog to harm others, I dissent.

Plaintiff Andrea Collier commenced this action against defendants Charles Zambito and Mary Zambito seeking damages for injuries sustained by her 12-year-old son, Matthew, when defendants’ dog, a mixed beagle/collie/rottweiler, bit him in the face while he was a guest at their home.

At the examination before trial, Matthew testified that he had visited defendants’ home on five or six prior occasions as he was a friend of defendants’ son. During those visits Matthew observed that the dog, Cecil, was “[v]ery wild,” that he had a lot of energy and that he ran around a lot within the confines of the kitchen, which had a three-foot gate preventing the dog from going to other parts of the house. Cecil had never bitten or threatened Matthew. The one time Matthew’s mother saw Cecil, he seemed “very active, running around the house, jumping up on the furniture and down. He seemed friendly.”

On the day of the incident, Matthew was one of seven boys who had been invited to the house. As Matthew was passing through the kitchen after going to the nearby bathroom, he noticed Ms. Zambito standing with the dog. At her request, he extended his hand so that Cecil could smell him, but instead Cecil lunged at him, biting him on the face.

In her deposition, Ms. Zambito testified that she told Matthew that Cecil “knows you, let him smell you.” She had opened the kitchen gate and was holding Cecil by a leash when he lunged at Matthew. The family had acquired Cecil seven months earlier when he was a puppy. Around members of the family, Cecil was mild, but when Ms. Zambito arrived home, he would excitedly jump all over her. Around others, Cecil would get excited and bark. But he had not jumped on anyone other than family members because he was confined to the kitchen whenever they had visitors. When Cecil was not inside the house, the Zambitos chained him to a pole in the backyard. Cecil did not interact with other dogs. Ms. Zambito’s testimony regarding Cecil’s demeanor was echoed by Mr. Zambito and their son Dan.

Supreme Court denied defendants’ and plaintiffs respective motions for summary judgment, finding that Cecil’s behavior and the practice of confining him “may be sufficient evidence to give rise to implied knowledge of Cecil’s propensity for viciousness.”

Over the dissent of two Justices, the Appellate Division reversed, concluding that defendants met their burden by testifying that Cecil “had no history of biting or behaving in a threatening manner toward anyone.” (299 AD2d 866, 866 [2002].) To the dissent, Cecil engaged in “aggressive and intimidating behavior,” which gave rise to an issue of fact. (Id. at 867.)

The prevailing view under American common law, as stated by Oliver Wendell Holmes, Jr. in The Common Law, was that “a man is bound at his peril to keep his cattle from trespassing, and he is liable for damage done by his dog or by any fierce animal, if he has notice of a tendency in the brute to do the harm complained of.” Expounding on the meaning of viciousness and notice, this Court stated in Dickson v McCoy (39 NY 400 [1868]) that

“[b]y vicious propensity, is included a propensity to do any act that might endanger the safety of the persons and property of others in a given situation. . . . [T]he owner is not liable for permitting his domestic animal to be at large when he has no reason to apprehend that any injury to others will result therefrom. If he has such reason, he is liable” (id. at 403).

In Rider v White (65 NY 54 [1875]), the issue of vicious propensity was properly submitted to the jury even though there was no evidence that the dogs ever attacked or injured anyone. There was evidence that the seven large dogs “ran out furiously at passers-by, indicating a disposition to inflict an injury upon them” (id. at 56). It was also shown that the owners had posted “beware of dogs” signs, had warned someone to beware, and that one of the dogs was kept in chains a portion of the time.

In Strunk v Zoltanski (62 NY2d 572, 574 [1984]), there was an issue of fact as to whether the landlord, who did not live on the premises, could be found liable based on the landlord’s observation of a tied-down German Shepherd dog that was “ ‘barking very loudly, jumping up and down, growling and acting ferocious.’ ”

It is true that Cecil did not bite or threaten anyone. Reasonable people could conclude that defendants had no notice that Cecil was prone to viciousness. The question then is whether, viewing the evidence in the light most favorable to the plaintiff, any reasonable person could conclude that Cecil had a “propensity to do any act that might endanger the safety” of someone like Matthew. There are good reasons for answering the question in plaintiffs favor.

First, the nature of the attack is itself significant. Unprovoked and with Ms. Zambito beside him, Cecil lunged straight for Matthew’s face after barking at him, causing a serious injury (see Wilson v Livingston, 305 AD2d 585, 586 [2d Dept 2003]; Brophy v Columbia County Agric. Socy., 116 AD2d 873 [3d Dept 1986]; Perrotta v Picciano, 186 App Div 781 [1st Dept 1919]). Cecil was pulled back by Ms. Zambito and put into a nearby room by Mr. Zambito.

Second, the manner in which the Zambitos confined Cecil may reflect an awareness that Cecil posed a threat to visitors. Of course dogs run around and bark. But not all dogs are kept away from visitors simply because they run around and bark. One could reasonably conclude that defendants simply did not want visitors to feel uncomfortable. But one could also reasonably conclude that defendants confined Cecil to the kitchen because they were aware of a potential danger. Plaintiff should be given the benefit of this favorable inference. That Cecil never actually bit or threatened anyone should not be dispositive. As Ms. Zambito implied, Cecil had never been given the opportunity to do so. But on the one occasion when Ms. Zambito did let Cecil out of the kitchen so that he could smell Matthew, Cecil attacked.

Third, in assessing the level of threat posed by a dog, due consideration must be given to the age of the victim. When a child is involved, a dog’s potential danger increases and an owner needs to be more careful. Children are more vulnerable to dog attacks than adults. Here, Ms. Zambito exposed a 12 year old to a dog who was kept away from all visitors and continually barked at the child prior to attacking him. While Ms. Zambito’s conduct may have been well-intentioned, a jury could reasonably conclude that it was ill-considered in light of the attendant risk of injury.

Accordingly, defendants’ motion for summary judgment should be denied.

Chief Judge Kaye and Judges Graffeo and Read concur with Judge Ciparick; Judge G.B. Smith dissents and votes to reverse in a separate opinion in which Judge Rosenblatt concurs; Judge R.S. Smith taking no part.

Order affirmed, with costs.

       The dissent’s suggestion that one could “reasonably conclude that defendants confined Cecil to the kitchen because they were aware of a potential danger” is simply unsupported by the record (dissenting op at 450).

       We note that, by contrast, a number of states have statutorily ehminated the requirement that a plaintiff prove that the dog owner knew or should have known of the dog’s vicious tendencies. In adopting a strict liability approach, these states decided that dog owners as opposed to wholly innocent victims—here a child—should bear the risks of dog ownership (see e.g. Ariz Rev Stat § 11-1025; Cal Civ Code § 3342; Fla Stat Ann § 767.04; Iowa Code Ann § 351.28; Mich Comp Laws Ann § 287.351; Minn Stat Ann § 347.22; Mont Code Ann § 27-1-715; Neb Rev Stat § 54-601; NJ Stat Ann § 4:19-16).


source: Caselaw Access Project

author: G.B. Smith, J. Read, J.

license: Public Domain

text:
    [807 NE2d 869, 775 NYS2d 757]
    Ray Evans et al., Appellants, v Famous Music Corporation, Respondent.
    Argued January 6, 2004;
    decided February 24, 2004

      POINTS OF COUNSEL

      McLaughlin & Stern, LLP, New York City (David Blasband of counsel), for appellants.
    I. The Appellate Division erred in reversing motion court’s conclusion that the songwriters’ contracts unambiguously require Famous Music Corporation to share the benefits of the foreign tax credit with the songwriters. (Wendel Found. v Moredall Realty Corp., 282 NY 239; Rudd v 176 W. 87th St. Owners Corp., 283 AD2d 202; Fairfax Co. v Whelan Drug Co., 105 AD2d 647; 1100 Ave. of Ams. Assoc. v Bryant Imports, 234 AD2d 101; S.B.S. Assoc. v Weissman-Heller, Inc., 190 AD2d 529; Ran First Assoc. v 363 E. 76th St. Corp., 297 AD2d 506; Keasby & Mattison Co. v Rothensies, 133 F2d 894, 320 US 739; Greenfield v Philles Records, 98 NY2d 562; Woodmere Academy v Steinberg, 41 NY2d 746; Uribe v Merchants Bank of N.Y., 91 NY2d 336.) II. Even if the contracts are ambiguous, rules of contract interpretation compel the construction urged by the songwriters. (Jacobson v Sassower, 66 NY2d 991; Rentways v O’Neill Milk & Cream Co., 308 NY 342; Fleischman v Furgueson, 223 NY 235; A.J. Cerasaro, Inc. v State of New York, 97 AD2d 598; City of New York v Brooklyn Union El. R.R. Co., 182 App Div 507; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640; Matter of Gerseta Corp. v Silk Assn. of Am., 220 App Div 293; Matter of Reuters Ltd. v Dow Jones Telerate, 231 AD2d 337; Schlanger v Hayman, 185 App Div 599; McDonald v Acker, Merrall & Condit Co., 192 App Div 123.)

      Loeb & Loeb, LLP, New York City (Jonathan Zavin and Alyson M. Weiss of counsel), for respondent.
    I. The plain language of the contracts does not entitle plaintiffs to receive the “benefit” of any foreign tax credits. (Uribe v Merchants Bank of N.Y., 91 NY2d 336; 731 W. Lake Rd. v Boheen, 58 AD2d 1038; Morlee Sales Corp. v Manufacturers Trust Co., 9 NY2d 16; Matter of Caruso v Ward, 146 AD2d 22; Breed v Insurance Co. of N. Am., 46 NY2d 351; Rodolitz v Neptune Paper Prods., 22 NY2d 383; 8-14 W. 38th St. Corp. v W. & J. Sloane, 181 AD2d 545.) II. Plaintiffs’ contract construction is contrary to the decisions of other courts to have considered this issue. (Surge Licensing v Copyright Promotions, 258 AD2d 257; Croce v Kurnit, 737 F2d 229; Fairfax Co. v Whelan Drug Co., 105 AD2d 647; Wendel

      Found. v Moredall Realty Corp., 282 NY 239; Mir v Mir, 135 AD2d 690; Albany Sav. Bank, FSB v Halpin, 117 F3d 669; DeVanzo v Newark Ins. Co., 44 AD2d 39, 37 NY2d 733; Matter of Caruso v Ward, 146 AD2d 22; Greenfield v Philles Records, 98 NY2d 562.) III. Even if the contracts are ambiguous, the undisputed evidence of the parties’ intent compels the construction urged by Famous Music Corporation. (Federal Ins. Co. v Americas Ins. Co., 258 AD2d 39; Town of Pelham v City of Mount Vernon, 304 NY 15; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640; Mallad Constr. Corp. v County Fed. Sav. & Loan Assn., 32 NY2d 285; Schechter Assoc. v Major League Baseball Players Assn., 256 AD2d 97; Edelman v Robert A. Becker, Inc., 194 AD2d 507; AJ Contr. Co. v Trident Mgrs., 234 AD2d 195; 731 W. Lake Rd. v Boheen, 58 AD2d 1038; Bernstein v Felske, 143 AD2d 863; Mocca Lounge v Misak, 94 AD2d 761.)

      Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York City (Carey R. Ramos and Lauren A. McMillen of counsel), for National Music Publishers’ Association Inc., amicus curiae.
    I. Appellants’ novel interpretation of their long-standing contracts cannot be what the contracting parties intended. (Nassau Ch., Civ. Serv. Empls. Assn. v County of Nassau, 77 AD2d 563; Shirai v Blum, 239 NY 172; Kasen v Morrell, 6 AD2d 816; Matter of Reuters Ltd. v Dow Jones Telerate, 231 AD2d 337; Rooney v Columbia Pictures Indus., Inc., 538 F Supp 211; Zodiac Enters. v American Broadcasting Cos., 56 NY2d 738.) II. Appellants’ novel interpretation, if adopted, would be inequitable to parties who have been successfully dealing with each other under the contracts at issue for over 40 years. (John Doris, Inc. v Guggenheim Found., 209 AD2d 380; Lindsey v Normet, 405 US 56; Lang v Pataki, 176 Misc 2d 676; Bartsch v Metro-Goldwyn-Mayer, Inc., 391 F2d 150.)
   OPINION OF THE COURT

G.B. Smith, J.

This action involves the interpretation of a provision in six music royalty contracts detailing the manner in which income from the exploitation of songs must be apportioned between the plaintiff songwriters and defendant Famous Music Corporation. Specifically, the question is whether the contract provision obligates Famous to share with plaintiffs certain tax savings resulting from foreign tax credits. We answer the question in the negative.

I.

Ray Evans, Henry Mancini, Johnny Mercer and Richard Whiting are legendary writers of American popular music, particularly music for movies. Famous is a music publisher that Paramount Pictures (Famous’s predecessor-in-interest) established in 1928 to market music from its films. Famous today is a subsidiary of Viacom.

On August 9, 1945, plaintiff Ray Evans entered into a six-month employment contract with Paramount as a staff writer, composer and arranger. Paramount also agreed to pay Evans additional income based on the exploitation of any songs or music he composed pursuant to the contract. On August 31, 1960, Henry Mancini entered into a similar contract with Paramount, the second contract in issue in this case. Mancini’s services under the contract dealt with the movie “Breakfast At Tiffany’s” and its accompanying song, “Moon River,” for which Johnny Mercer wrote the lyrics pursuant to the third contract in this action. Mancini entered into two additional contracts— the fourth and fifth at issue—one for the movie “Hatari,” the other in 1981 with Paramount for the movie “Mommie Dearest.”

Finally, the sixth contract before us, dated November 9, 1959, was entered into between Paramount and the widow and two daughters of Richard Whiting for works he had composed. The contract is a settlement agreement resolving past royalty disputes. The contract is dated November 1959, and covers numerous songs co-authored by Richard Whiting.

All six contracts contain the following substantially identical provision, which requires that Famous pay the songwriters

“[f|or both words and music an amount equal to fifty per centum (50%) of all net sums actually received by the Corporation with respect to such song or musical composition from any other source or right now known or which may hereafter come into existence (except small performing rights and except as provided in the next following paragraph hereof), less all expenses and charges in connection with administering said rights or collecting such sums . . . and less all deductions for taxes.”

Basing their lawsuit on this provision, plaintiffs allege that Famous breached its obligation to reimburse them for their proportional share of tax credits Famous received for the payment of foreign taxes. The complaint alleges that for the years it realized profit for the overseas exploitation of its music, Famous paid taxes to the foreign governments involved and regularly received the benefit of foreign tax credits on its United States tax returns. Plaintiffs claim that under the above-quoted provision, they are entitled to half of the value of the foreign tax credits Famous received.

Famous moved for summary judgment arguing that (1) the plain meaning of the provision does not support plaintiffs’ right to recover the damages they seek; (2) because of past custom and practice in the industry, plaintiffs are not entitled to recovery; and (3) had the parties intended for the plaintiffs to receive such a benefit—which involves a complex calculation dependent on numerous factors—they would have explicitly provided for it in their contracts. In support of the motion, Famous submitted the affidavit of its Executive Vice President of Finance and Administration, highlighting the uncertainty and complexity surrounding the foreign tax credit, and explaining that it was inconsistent with the performance of the parties and industry practice involving similar contracts for publishing companies to credit or share the benefit of any foreign tax credit.

Plaintiffs cross-moved for partial summary judgment, offering the affidavit of a certified public accountant explaining how foreign tax credits operate. Plaintiffs also submitted the affidavit of the Executive Director of the Songwriters Guild of America (SGA), stating that, in 1997, he wrote to Famous and other companies inquiring about the use of foreign tax credits, but received no adequate answer. Famous then responded with the affidavit of a certified public accountant who specializes in the recording/entertainment industry. The accountant was not aware of any music publishing company that interpreted the standard term “all net sums received” or “all net sums actually received” to include the value or benefit of a foreign tax credit. He opined that, in order for a company to make payments relating to tax credits, it would have to agree specifically to do so. He further stated that the calculation of foreign tax credits on a song-by-song basis “would be extremely difficult and impractical, if not impossible.”

Supreme Court granted plaintiffs’ motion for partial summary judgment, holding Famous liable under the contracts. The court reasoned that since Famous suffers no loss when a tax payment is credited, “there is no justification for deducting the foreign tax payments from the gross receipts when calculating the ‘net sums’ upon which plaintiffs’ royalty payments are based.” The court found the contractual provisions at issue unambiguous and saw no need to rely on extrinsic evidence. In addition, the court held that the complexities surrounding computation of the foreign tax credits did not relieve Famous of its contractual obligation to share the benefits with plaintiffs. The Appellate Division reversed, concluding that “the benefit of any foreign tax credit was not contemplated by the parties” since the contracts identified the payments plaintiffs were entitled to, but omitted any mention of foreign tax credits. (302 AD2d 216, 217 [2003].) We now affirm.

II.

Unlike many of its trading partners, the United States taxes its citizens and residents on their worldwide income. The foreign tax credit was enacted in 1918 to prevent American companies from being taxed both by the United States and by the foreign country in which the income is generated. Without the credit, United States companies doing business abroad would be at a distinct disadvantage with foreign companies that are not taxed on their foreign income. Generally, where the foreign tax liability is lower than the United States tax liability, the taxpayer will still have a United States tax liability. Where the foreign tax liability is higher than the United States tax liability, the taxpayer will have excess credit. Excess credits may also result from limits on the use of credits.

Application of the foreign tax credit is complex, even by tax standards. As Famous and amicus National Music Publishers’ Association emphasize, there are numerous technicalities surrounding the use of the credit. For example, the credit cannot be used to decrease United States taxes on United States source income (Internal Revenue Code [IRC] [26 USC] § 904 [a]). Credits and foreign source income must be categorized into different so-called “baskets” which may not be combined (IRC § 904 [d] [1]). The credit is elective, and excess credit may be carried back two years and forward five years. These technicalities make the foreign tax credit “one of the most intricate and convoluted features of the entire U.S. tax system” (Kaplan, Federal Taxation of International Transactions, at 81 [West Publishing 1988]; see also Graetz, The David R. Tillinghast Lecture, Taxing International Income: Inadequate Principles, Outdated Concepts, and Unsatisfactory Policies, 54 Tax L Rev 261, 264 [2001]). Here, the calculation is even further complicated by inserting Viacom (the entity that would take the credit) into the picture, by classifying royalties as either passive income or general limitation income, by calculating the credit limit allowed under each basket, by carrying over and back excess credits, by potential redeterminations years later, and by a host of other factors.

While a highly complex tax matter, the law issue before us is a simple and familiar one: how should the parties’ contract be interpreted? To phrase it differently, does the obligation to pay half of “all net sums actually received . . . less all deductions for taxes” require Famous to pay half of any tax savings to Famous resulting from the use of the foreign tax credit?

It is well settled that our role in interpreting a contract is to ascertain the intention of the parties at the time they entered into the contract. If that intent is discernible from the plain meaning of the language of the contract, there is no need to look further. This may be so even if the contract is silent on the disputed issue. Illustrative is Greenfield v Philles Records (98 NY2d 562 [2002]), a case involving a contract between recording artists and their producer. There, the issue was whether the producer could use the master recordings for synchronization and other new technologies even though the contract did not explicitly authorize it. Reading the contract as a whole, and consistent with the rules of contract interpretation, we held that the broad grant of ownership rights, without reservation, included the right to synchronization and other newly developed formats. Had the contract been susceptible to more than one reasonable interpretation, it would have been ambiguous.

The contractual provision in the case before us establishes a mechanism for calculating the sharing of income received from the exploitation of songs. The calculation begins with “all net sums actually received” by Famous from “any other source or right now known or which may hereafter come into existence.” From “all net sums actually received,” Famous must deduct certain expenses and taxes, and half of the remainder belongs to the artists.

Plaintiffs argue that the language “from any other source or right now known or which may hereafter come into existence” encompasses a foreign tax credit. This clause addresses the means of exploitation. Yet the credit is not income that Famous receives in exchange for the right to use the songs. The credit is given by the United States government because of a tax policy, not in return for the use of songs. While the credit diminishes tax liability, it is not the same as cash or its equivalent.

Plaintiffs also argue that while the contracts specify certain usages that require no payment to the songwriters as well as expenses that must be deducted, they do not exclude benefits from the foreign tax credit. The argument is based on the maxim that the expression of one thing is the exclusion of another. The maxim, however, does not fit neatly within plaintiffs’ interpretation since it would involve placing into the contract a term that was excluded. The argument is a double-edged sword. The contracts provide that the sums specifically provided “represent the total amount which” the songwriters are entitled to. Yet the foreign tax credit is not included. While it is clear that Famous obligated itself to deduct taxes, it is not equally clear that it obligated itself to make payments to the songwriters in the event that the foreign tax credit proved beneficial.

Faced with this ambiguity, we turn to extrinsic evidence for guidance as to which interpretation should prevail. The evidence strongly favors Famous. To begin with, the songwriters have received royalties under these contracts for periods of time ranging from 23 to 59 years, and have never demanded a showing of any credits. When a demand was made, it came in 1997, through a third party, the SGA. The contracts are fully capable of being performed—and have been for decades—without the interpretation now sought by plaintiffs. It is no answer that plaintiffs claim to have been unaware that tax credits were being taken by Famous or that Famous was evasive as to whether there were any. Foreign tax credits have existed since 1918.

Industry custom and practice also favors Famous. Plaintiffs did not refute the accountants’ assertions that the language used in the contracts was insufficient to impose on Famous the obligation of sharing any benefits resulting from the use of the foreign tax credit with the songwriters. Moreover, when music publishing companies have shared credits with songwriters, they have done so pursuant to an explicit clause.

The industry practice and custom reflects to some extent the generally greater bargaining power of music publishing companies. It also reflects the unlikelihood that a music publisher would assume an onerous obligation without explicitly agreeing to do so, particularly when the obligation is fraught with uncertainty, including how the determination of the benefit should be conducted, how much of the benefit (if any) is attributable to the songwriter, and when and how the benefit would be shared.

In light of the extrinsic evidence, the reasonable interpretation of the contracts before us is that they do not require the sharing of any benefit resulting from defendant’s use of the foreign tax credit.

The reasonable expectation of the parties, the wording of the contracts and the industry practice all demonstrate that the foreign tax credits should not result in additional compensation to plaintiffs.

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

Read, J.

(dissenting). These form contracts obligate respondent Famous Music Corporation, a major music publisher, to pay appellants, a well-known songwriter and the heirs of other well-known songwriters (collectively Songwriters), specified amounts for identified formats in which their work is published in the United States and Canada (e.g., regular piano copies) with identified exclusions (e.g., certain television and film synchronization rights), plus 50% of “all net sums actually received by [Famous] . . . from any other source or right now known or which may hereafter come into existence . . . less all expenses and charges . . . and less all deductions for taxes.” Thus, Famous agreed to pay the Songwriters listed royalties plus a catchall royalty consisting of half of any net profit actually realized by Famous from exploitation of Songwriters’ musical compositions in ways or places neither specifically delineated in nor excluded by the contract. This contractual scheme is absolutely clear and unambiguous.

To exploit Songwriters’ compositions abroad, Famous entered into subpublishing contracts with foreign music publishers. The foreign subpublishers administer Famous’s catalog of songs and collect the royalties; deduct a fee (usually a percentage of the royalties collected) and the taxes imposed by the foreign country; and account to Famous for the balance. Famous pays half of this balance to Songwriters under the catchall royalty provision. Thus, Famous and Songwriters effectively each pay half of the foreign taxes. In certain instances, however, Famous takes a foreign tax credit on its United States income taxes for the full amount of foreign taxes paid on both its own and Songwriters’ behalf. Songwriters seek their one-half share of any deductions for foreign taxes actually reimbursed to Famous in this way. This case, then, turns on the meaning of the phrase “less all deductions for taxes.”

As we stated in Greenfield v Philles Records (98 NY2d 562, 571 [2002]), “[i]f the contract is more reasonably read to convey one meaning, the party benefitted by that reading should be able to rely on it; the party seeking exception or deviation from the meaning reasonably conveyed by the words of the contract should bear the burden of negotiating for language that would express the limitation or deviation” (quoting Boosey & Hawkes Music Publs., Ltd. v Walt Disney Co., 145 F3d 481, 487 [2d Cir 1998]). The word “deduction” means “something that is or may be subtracted” (Merriam-Webster’s Collegiate Dictionary 301 [10th ed]). “[L]ess all deductions for taxes” is therefore more naturally read to encompass subtractions for taxes for which Famous is—and remains—out of pocket. If these subtractions are subsequently reimbursed, they are not, in fact, subtractions at all. By disregarding reimbursed tax payments, Famous is calculating the catchall royalty in contravention of a clear and unambiguous contractual scheme, which calls for the parties to split net profits evenly. That the parties in 1945 (the date of the Evans contract) did not identify precise elements (i.e., foreign tax credits) that might bear on how to calculate “all deductions for taxes” in future decades does not render their intent ambiguous.

Finding the contract ambiguous, though, the majority gleans intent from the parties’ course of dealing. Principally, the majority considers it critical that Songwriters did not demand “a showing of any credits” until 1997, and then, only by letter from the Songwriters Guild of America (majority op at 459). For the majority, it is not enough that Famous was being “evasive.”

The availability of foreign tax credits under the Internal Revenue Code long predates these contracts; however, Famous does not contend that it was taking advantage of foreign tax credits in Japan or elsewhere when these contracts were signed. The record does not establish when Famous first began employing these credits to reimburse itself for foreign taxes effectively paid by Songwriters. The record does, however, show that Songwriters were unaware that Famous was doing this until shortly before the litigation began. Moreover, Famous was not just “evasive”; Famous repeatedly and emphatically denied using foreign tax credits in response to point-blank inquiries made by the Guild on Songwriters’ behalf. As we stated in Continental Cas. Co. v Rapid-American Corp. (80 NY2d 640, 651 [1993]), “[i]f ambiguity exists, ‘[t]o show a practical construction . . . there must have been conduct by the one party expressly or inferentially claiming as of right under the doubtful provision [i.e., Famous], coupled with knowledge thereof and acquiescence therein, express or implied, by the other [i.e., Songwriters]’ ” (citations omitted and emphasis added).

Further, “[i]n New York, all contracts imply a covenant of good faith and fair dealing in the course of performance” (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153 [2002]). The covenant of good faith and fair dealing

“embraces a pledge that ‘neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.’ While the duties of good faith and fair dealing do not imply obligations ‘inconsistent with other terms of the contractual relationship’ they do encompass ‘any promises which a reasonable person in the position of the promisee would be justified in understanding were included’ ” (id. [citations omitted]).

This is particularly true in relationships where the parties “do not deal as equals either in terms of access to information or business acumen and thus, . . . often lack equal bargaining power” (id. at 154).

Although Songwriters were well-established artists, they were not dealing as equals in terms of access to information with regard to Famous’s use of these allegedly extremely complicated foreign tax credits. Famous was therefore under a heightened obligation to honor any promises that Songwriters were justified in relying upon—including the implied promise that “all deductions for taxes” would, in fact, encompass actual, unreimbursed outlays for taxes. The majority, in effect, converts a good faith requirement to account for deductions into a negotiable contract “benefit” that is forfeited if not spelled out in prescient detail and diligently policed.

The majority also contends that the contracts should be construed in accordance with music industry custom and practice by which music publishers apparently now may pay artists a share of foreign tax credits, but only pursuant to an explicit clause. Of course, custom and usage cannot be used to contradict, alter or vary the terms of an unambiguous contract. Furthermore, Famous cannot establish, as it must, that “the party sought to be bound [Songwriters] [were] aware of the custom, or that the custom’s existence was ‘so notorious’ that [they] should have been aware of it” (British Intl. Ins. Co. Ltd. v Seguros La Republica, S.A., 342 F3d 78, 84 [2d Cir 2003]). Again, there is no suggestion that what might constitute music industry custom and practice today was the same when these contracts were signed as long as 60 years ago. Further, I agree with Supreme Court that “the fact that defendants have been successful in breaching a material term of their royalty contracts for years hardly justifies a continuation of such behavior based on custom and usage.”

Accordingly, I would reverse the order of the Appellate Division.

Chief Judge Kaye and Judges Ciparick, Rosenblatt and Graffeo concur with Judge G.B. Smith; Judge Read dissents and votes to reverse in a separate opinion; Judge R.S. Smith taking no part.

Order affirmed, with costs.

      . Except for Ray Evans, plaintiffs are successors-in-interest to the songwriters. Famous is the assignee of the rights to exploit the songs under the contracts at issue.

      . The record contains several letters between the SGA and Famous. In its initial response, Famous stated that “[a]ny foreign taxes incurred by these subpublishers or withheld from payments due these subpublishers by foreign societies will not even support a claim for foreign tax credit by our company, because these foreign taxes have not been directly imposed or withheld in our name.” In addition Famous argued that even if it owned the subsidiary, the taxes would not be paid on the songwriter’s name so that the songwriter would not be entitled to the credit. The last letter by Famous states that only with respect to Japanese taxes can Famous obtain the foreign tax credit, and even then Famous could not pass along any credit to the songwriters.

      . This occurs when the subpublisher pays the foreign taxes in Famous’s name directly, as is most notably the case in Japan.

      . In answer to letters from the Guild, Famous represented that it did not employ foreign tax credits, and was, in fact, legally unable to do so. Only after an audit by the Guild did Famous finally acknowledge its use of foreign tax credits with regard to taxes paid in Japan. Famous’s royalty statements to Songwriters did not indicate that Famous was utilizing foreign tax credits and, indeed, did not even show that Songwriters were paying foreign taxes.

      . That the music publishing companies are concededly capable of allocating reimbursed foreign tax payments belies Famous’s argument that these calculations are too difficult to make.


author: Chief Judge Kaye.

text:
    [807 NE2d 273, 775 NYS2d 224]
    The People of the State of New York, Appellant, v Walter Gonzalez, Respondent.
    Argued February 19, 2004;
    decided March 25, 2004

      POINTS OF COUNSEL

      Howard R. Relin, District Attorney, Rochester (Wendy Evans Lehmann of counsel), for appellant.
    The trial court properly denied defendant’s motion for a trial order of dismissal, since there was sufficient evidence to permit the jury to conclude that he acted recklessly under circumstances evincing a depraved indifference to human life, and accordingly the Appellate Division erred in reversing defendant’s conviction for depraved indifference murder. (People v Sanchez, 98 NY2d 373; People v Tankleff, 199 AD2d 550, 84 NY2d 92; People v Cole, 233 AD2d 247, 89 NY2d 984; People v Crawford, 295 AD2d 361, 98 NY2d 696; People v Salcedo, 304 AD2d 309; People v Flowers, 289 AD2d 504, 97 NY2d 754; People v Lyons, 280 AD2d 926, 96 NY2d 802; People v Alston, 298 AD2d 702, 99 NY2d 554; People v Hafeez, 100 NY2d 253; People v Fink, 251 AD2d 751, 92 NY2d 924.)

      Edward J. Nowak, Public Defender, Rochester (Timothy P. Donaher of counsel), for respondent.
    Given the dearth of evidence supporting the depraved indifference murder count, the trial court erred in not granting defense counsel’s motion for a trial order of dismissal seeking to dismiss that count. (People v Hafeez, 100 NY2d 253; People v Williams, 84 NY2d 925; People v Hines, 97 NY2d 56; People v Lynch, 95 NY2d 243; People v Roe, 74 NY2d 20; People v Register, 60 NY2d 270, 466 US 953; People v Gomez, 65 NY2d 9; People v Russell, 91 NY2d 280; People v Gallagher, 69 NY2d 525; People v Sanchez, 98 NY2d 373.)
   OPINION OF THE COURT

Chief Judge Kaye.

On January 25, 2000, defendant entered a Rochester barber shop and whispered something to another person in the shop. Although both left quickly, defendant soon returned, kicked in the door, stepped inside, pulled a gun from his waistband and shot the victim in the chest from a distance of six to seven feet. As the victim fell to the floor, defendant fired again, shooting him in the head. Defendant then leaned over the prone body and fired eight more shots into the victim’s back and head. Defendant waved the gun at the only eyewitness—the barber— warned him not to say anything and walked out the door. Medical testimony established that defendant shot the victim once in the chest, once in the face from 6 to 18 inches away, six times in the back of the head from approximately six inches away, and twice in the back. Any one of the shots could have been fatal.

After his arrest, defendant made a written statement in which he claimed that he had been afraid of the victim, who had repeatedly threatened him because the victim’s niece had accused him of raping her. Defendant said that he became tense and panicked when he saw the victim in the barber shop. Defendant further stated that he had been carrying a gun for protection, but had “blanked out” as a result of fear and could not recall the shooting. The next day, he “couldn’t believe what had happened.” Later, on the way to booking, a police officer asked him, “Well, if you had blacked out, why are you having these nightmares? . . . Could you be having these nightmares because you shot him?” Defendant replied, “Of course I shot him.”

Defendant was indicted for both intentional and depraved indifference murder, as well as for criminal possession of a weapon in the second and third degrees. At the conclusion of the People’s proof, defendant moved for a trial order of dismissal, arguing that the evidence was legally insufficient to establish his guilt of depraved indifference, as opposed to intentional, murder. Supreme Court denied the motion and submitted both counts to the jury in the alternative. The jury acquitted defendant of intentional murder but convicted him of depraved indifference murder and two counts of criminal possession of a weapon. The Appellate Division, with one Justice dissenting, reversed the murder conviction, concluding that the evidence was legally insufficient to establish depraved indifference, and affirmed the weapon possession convictions, for which defendant is serving 15 years in prison. We now affirm.

Discussion

A defendant is guilty of depraved indifference murder in the second degree when “[ujnder circumstances evincing a depraved indifference to human life, he recklessly engages in conduct which creates a grave risk of death to another person, and thereby causes the death of another person” (Penal Law § 125.25 [2]). “A person acts recklessly with respect to a result or to a circumstance described by a statute defining an offense when he is aware of and consciously disregards a substantial and unjustifiable risk that such result will occur or that such circumstance exists. The risk must be of such nature and degree that disregard thereof constitutes a gross deviation from the standard of conduct that a reasonable person would observe in the situation” (Penal Law § 15.05 [3]).

As the Appellate Division correctly concluded, in this case “defendant was guilty of an intentional shooting or no other” (People v Wall, 29 NY2d 863, 864 [1971]). A defendant acts intentionally with respect to a result “when his conscious objective is to cause such result” (Penal Law § 15.05 [1]). The only reasonable view of the evidence here was that defendant intentionally killed the victim by aiming a gun directly at him and shooting him 10 times at close range, even after he had fallen to the ground.

Depraved indifference murder differs from intentional murder in that it results not from a specific, conscious intent to cause death, but from an indifference to or disregard of the risks attending defendant’s conduct. Depraved indifference murder is exemplified by a defendant—unconcerned with the consequences—who fires into a crowd (see e.g. People v Jernatowski, 238 NY 188 [1924]); drives an automobile down a crowded sidewalk at high speed (see People v Gomez, 65 NY2d 9 [1985]); shoots a partially loaded gun at a person’s chest during a game of Russian roulette (see People v Roe, 74 NY2d 20 [1989]); abandons a helplessly intoxicated person on a snowy highway at night (see People v Kibbe, 35 NY2d 407 [1974]); or repeatedly beats a young child over a period of several days (see People v Poplis, 30 NY2d 85 [1972]).

When a defendant is in that sense indifferent to whether death will likely result from his or her conduct—including with respect to a single victim—depraved indifference may be manifest. But where, as here, a defendant’s conduct is specifically designed to cause the death of the victim, it simply cannot be said that the defendant is indifferent to the consequences of his or her conduct.

The prosecution’s speculative argument—that the jury may have concluded that defendant recklessly fired the first shot spontaneously or impulsively and then decided to intentionally shoot nine more times—is unsupported by any reasonable view of the evidence and thus no rational jury could have accepted it. “From this record there exists no valid line of reasoning that could support a jury’s conclusion that defendant possessed the mental culpability required for depraved indifference murder” (People v Hafeez, 100 NY2d 253, 259 [2003]).

The People also maintain that the evidence was sufficient to support a conclusion that defendant acted recklessly by consciously disregarding the risk that if he came across someone he intended to shoot while carrying a gun, he might intentionally shoot that person, or that if he did, that person would die. But a person cannot act both intentionally and recklessly with respect to the same result. “The act is either intended or not intended; it cannot simultaneously be both” (People v Gallagher, 69 NY2d 525, 529 [1987]). Because “guilt of one necessarily negates guilt of the other,” intentional and depraved indifference murder are inconsistent counts (id.).

Depraved indifference murder does not mean an extremely, even heinously, intentional killing. Rather, it involves a killing in which the defendant does not have a conscious objective to cause death but instead is recklessly indifferent, depravedly so, to whether death occurs. When defendant shot his victim at close range, he was not recklessly creating a grave risk of death, but was creating a virtual certainty of death born of an intent to kill. There is no record evidence that defendant “consciously disregarded” that certainty. Indeed, firing 10 times did not establish extremely reckless homicide under Penal Law § 125.25 (2). Rather, it confirmed the intent to kill. The People’s tautology, if accepted, would improperly convert every intentional homicide into a depraved indifference murder.

Our decision in People v Sanchez (98 NY2d 373 [2002]) is not to the contrary. In Sanchez, depraved indifference murder was established by “the sudden shooting of a victim by a defendant who reached around from behind a door and fired into an area where children were playing, presenting a heightened risk of unintended injury” (Hafeez, 100 NY2d at 259). The defendant’s conduct in firing from behind a partly closed door established his indifference to the grave risk of death posed by his actions. Here, by contrast, the only conclusion reasonably supported by the evidence was that defendant shot to kill his intended victim.

When a defendant’s conscious objective is to cause death, the depravity of the circumstances under which the intentional homicide is committed is simply irrelevant. Nor can the wanton disregard for human life inherent in every intentional homicide convert such a killing into a reckless one. To rise to the level of depraved indifference, the reckless conduct must be “ ‘so wanton, so deficient in a moral sense of concern, so devoid of regard of the life or lives of others, and so blameworthy as to warrant the same criminal liability as that which the law imposes upon a person who intentionally causes the death of another’ ” (People v Russell, 91 NY2d 280, 287 [1998], quoting People v Fenner, 61 NY2d 971, 973 [1984]).

In arguing that the jury might have concluded that defendant acted out of fear and anger, and therefore without intent, the People confuse recklessness with extreme emotional disturbance. A defendant who commits murder because of uncontrollable emotion may be entitled to raise an affirmative defense to murder, but the extreme emotional disturbance defense “does not negate intent. The influence of an extreme emotional disturbance explains the defendant’s intentional action, but does not make the action any less intentional” (People v Patterson, 39 NY2d 288, 302 [1976], affd 432 US 197 [1977]; accord People v Fardan, 82 NY2d 638, 644 [1993] [extreme emotional disturbance defense “recognizes that defendant intended to kill his victim but, by legislative prerogative, the accused is viewed as being less blameworthy”]). Indeed, when there is a finding that the defendant acted under extreme emotional disturbance, the offense is reduced from intentional murder in the second degree to intentional—not reckless—manslaughter in the first degree (see Penal Law § 125.25 [1] [a]; § 125.20 [2]).

In short, because the depraved indifference murder count was unsupportable as a matter of law, the trial court erred in allowing the jury to consider it. It may well be that, had the jury not been invited to consider depraved indifference murder, it would have convicted defendant of intentional murder. But the choice to proceed on both theories does not exempt this case from the dictates of the law. Inasmuch as this “was a quintessentially intentional attack directed solely at the victim” (Hafeez, 100 NY2d at 258), the trial court erred in denying defendant’s motion for a trial order of dismissal as to the depraved indifference count.

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

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

Order affirmed.


author: Graffeo, J.

text:
    [807 NE2d 876, 775 NYS2d 765]
    Vermont Teddy Bear Co., Inc., Respondent, v 538 Madison Realty Company, Appellant.
    Argued February 10, 2004;
    decided March 25, 2004

      POINTS OF COUNSEL

      Jay Goldberg, PC, New York City (Jay Goldberg of counsel), and Greenberg Traurig, LLP (Israel Rubin and James W Perkins of counsel), for appellant.
    I. The court below improvidently affirmed the grant of summary judgment based upon numerous unresolved issues of fact. (Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Financial & Real Estate Consulting Co. v State of New York, 63 AD2d 802, 45 NY2d 837; Greenberg v Bar Steel Constr. Corp., 22 NY2d 210.) II. The majority below violated the plain meaning rule by engrafting a new condition not contained in the lease. (W.W.W. Assoc. v Giancontieri, 77 NY2d 157; Laba v Carey, 29 NY2d 302; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Reiss v Financial Performance Corp., 97 NY2d 195; Morlee Sales Corp. v Manufacturers Trust Co., 9 NY2d 16; Raner v Goldberg, 244 NY 438; Matter of Loew’s Buffalo Theatres, 233 NY 495; Uribe v Merchants Bank of N.Y., 91 NY2d 336; Schmidt v Magnetic Head Corp., 97 AD2d 151; Nissho Iwai Europe PLC v Korea First Bank, 99 NY2d 115.) III. The court below erred because its ruling amounted to a forfeiture. (Lyon v Hersey, 103 NY 264; J.N.A. Realty Corp. v Cross Bay Chelsea, 42 NY2d 392; Jones v Gianferante, 305 NY 135; Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685; Teitlebaum Holdings v Gold, 48 NY2d 51.) IV The court below erred when enforcing a new written notice condition that was futile because The Vermont Teddy Bear Co. had already conceded it was liable for rent. (Kooleraire Serv. & Installation Corp. v Board of Educ. of City of N.Y., 28 NY2d 101; Jacob & Youngs v Kent, 230 NY 239.)

      Reed Smith LLP, New York City (Andrew B. Messite of counsel), for respondent.
    I. The Appellate Division’s interpretation of the lease was the only plausible interpretation. (Andre v Pomeroy, 35 NY2d 361; Dougherty v Kinard, 215 AD2d 521; Hay Group Inv. Holding B.V. v Saatchi & Saatchi Co., 223 AD2d 458; Lake Constr. & Dev. Corp. v City of New York, 211 AD2d 514; Financial & Real Estate Consulting Co. v State of New York, 63 AD2d 802; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Helmsley-Spear, Inc. v New York Blood Ctr., 257 AD2d 64; Kass v Kass, 91 NY2d 554; Ruttenberg v Davidge Data Sys.

      Corp., 215 AD2d 191; McErlean v Mendelson, 256 AD2d 391.) II. The Appellate Division’s ruling did not create a forfeiture. (Jones v Gianferante, 305 NY 135; J.N.A. Realty Corp. v Cross Bay Chelsea, 42 NY2d 392; Oppenheimer & Co. v Oppenheim, Appel, Dixon & Co., 86 NY2d 685.) III. No triable issue existed as to the purported restoration of the premises. (Gala Trading v Adrienne, Inc., 174 AD2d 478; Hirsch v Berger Import & Mfg. Corp., 67 AD2d 30, 47 NY2d 1008; Chase v Skoy, 146 AD2d 563, 73 NY2d 995; Glick & Dolleck v Tri-Pac Export Corp., 22 NY2d 439; Matter of Union Indem. Ins. Co. of N.Y., 89 NY2d 94; Thomas v Hampton Express, 208 AD2d 824.) IV Written notice was not “futile.” (Kooleraire Serv. & Installation Corp. v Board of Educ. of City of N.Y., 28 NY2d 101.)
   OPINION OF THE COURT

Graffeo, J.

After substantial damage occurred to its retail store, the tenant in this case terminated its lease on the ground that the building owner had failed to provide timely written notice that the premises had been restored and were ready for occupancy. The courts below agreed with the tenant that the lease required the owner to give such notice. Because our longstanding contract interpretation principles prohibit us from adding a missing term to an unambiguous lease, we reverse the order of the Appellate Division and deny the tenant’s motion for summary judgment.

Beginning in October 1996, plaintiff Vermont Teddy Bear Co., Inc. (VTB) leased first-floor retail space at 538 Madison Avenue in Manhattan from defendant 538 Madison Realty Company. The parties executed a Real Estate Board of New York standard form store lease and annexed a rider to the document. The lease term was for 10 years, with escalating rental payments beginning at $300,000 per year. On December 7, 1997, during the second year of the lease term, a wall of 540 Madison Avenue—a building adjacent to the leased premises—collapsed. The disaster caused considerable damage to 538 Madison Avenue and temporarily shut down the area. In light of the extensive damage, the New York City Department of Buildings issued a “Vacate Order” that remained in effect for several months and required the discontinuance of occupancy at 538 Madison Avenue.

The effect of damage or destruction to the rental premises on the parties’ lease agreement is addressed in article 9 of the contract, which states that

“[i]f the demised premises are totally damaged or rendered wholly unusable by fire or other casualty, then the rent and other items of additional rent . . . shall be proportionately paid up to the time of the casualty and thenceforth shall cease until the date when the premises shall have been repaired and restored by Owner,. . . subject to Owner’s right to elect not to restore the same . . .

This provision further establishes that “[tjenant’s liability for rent shall resume five (5) days after written notice from Owner that the premises are substantially ready for Tenant’s occupancy.”

The rider that was incorporated in the lease contained a provision relating to casualty loss. Specifically, paragraph 3 of the rider gave VTB a limited tenancy termination option in the event of a fire or casualty. If VTB wished to invoke this termination right, the rider required it to

“provide Landlord within thirty (30) days of the fire or casualty, a written notice of Tenant’s election to terminate the Lease if the Premises are not restored within one (1) year after Owner’s receipt of such Tenant’s notice. In the event the Premises are not restored within such one (1) year period the Lease shall be deemed terminated as of the end of the 12 mos. period and both Landlord and Tenant shall be released from all obligations which may arise after the Termination Date.”

After the wall collapsed, VTB exercised its option under paragraph 3 of the rider and notified 538 Madison by letter dated December 16, 1997 that it intended to terminate the lease if the premises were not restored within one year. In response, 538 Madison demanded assurances that VTB intended to continue its tenancy pursuant to the terms of the lease. Despite this demand, VTB removed its remaining possessions from the store in July 1998 and surrendered its keys.

One year having elapsed since the casualty, VTB declared the lease terminated in December 21, 1998 correspondence to the owner stating: “[a]s of today’s date we have not received any notice from Landlord advising Tenant that restoration of the Premises has been completed or advising Tenant to reoccupy the Premises or to recommence the payment of rent under the Lease.” In addition, VTB demanded return of its $150,000 security deposit and the portion of its prepaid December 1997 rent for the balance of that month after the casualty. 538 Madison promptly rejected termination of the lease, asserting that VTB was aware that the premises had been substantially restored by July 1998 and the lease remained in effect.

In May 1999, VTB initiated this action seeking a declaration that its termination of the lease was effective and a judgment for the return of its security deposit and prepaid rent. 538 Madison answered, raising several counterclaims, and subsequently moved to dismiss the complaint. Supreme Court denied the motion, concluding that issues of fact existed with respect to whether and when the premises were restored. Following discovery, VTB moved for summary judgment. In its opposition to the motion, 538 Madison contended that the lease did not obligate it to provide written notice of restoration to avoid termination. Supreme Court granted the motion, dismissing 538 Madison’s affirmative defenses and counterclaims and directing entry of judgment in VTB’s favor in the amount of $170,161.29 plus interest.

A divided Appellate Division affirmed. The majority acknowledged that paragraph 3 of the rider “contains no explicit requirement of written notice of the completed restoration” (308 AD2d 33, 36 [1st Dept 2003]), but nevertheless concluded that article 9’s written notice provision pertaining to resumption of rental payment obligated 538 Madison to issue notice of restoration to prevent termination. Two Justices dissented and voted to deny the motion for summary judgment, reasoning that “the majority’s holding sanctions the judicial rewriting of the parties’ lease by imposing a written notice requirement on the landlord that does not exist under the plain terms of that document” (id. at 42). The dissent asserted that a question of fact regarding the restoration of the premises further precluded a grant of summary judgment in VTB’s favor. 538 Madison now appeals as of right (see CPLR 5601 [a]).

When interpreting contracts, we have repeatedly applied the “familiar and eminently sensible proposition of law [ ] that, when parties set down their agreement in a clear, complete document, their writing should ... be enforced according to its terms” (W.W.W. Assoc. v Giancontieri, 77 NY2d 157, 162 [1990]; see Reiss v Financial Performance Corp., 97 NY2d 195, 198 [2001]). We have also emphasized this rule’s special import “in the context of real property transactions, where commercial certainty is a paramount concern, and where . . . the instrument was negotiated between sophisticated, counseled business people negotiating at arm’s length” (Matter of Wallace v 600 Partners Co., 86 NY2d 543, 548 [1995] [internal quotation marks and citations omitted]). In such circumstances, “courts should be extremely reluctant to interpret an agreement as impliedly stating something which the parties have neglected to specifically include” (Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62, 72 [1978]). Hence, “courts may not by construction add or excise terms, nor distort the meaning of those used and thereby make a new contract for the parties under the guise of interpreting the writing” (Reiss, 97 NY2d at 199 [internal quotation marks and citation omitted]).

In this case, neither party claims that the lease is ambiguous or incomplete. Instead, 538 Madison argues that article 9 and rider paragraph 3 do not require it to send VTB written notice of restoration to prevent termination of the lease; it merely must repair and restore the premises for reoccupancy within the contractual time period. 538 Madison urges that strict construction of the parties’ unambiguous agreement demonstrates that the written notice requirement applies only to reinitiating VTB’s liability for rent. Similarly relying on the plain meaning of the lease, VTB asserts that, when article 9’s written notice provision is read together with the termination right in paragraph 3 of the rider, the only reasonable interpretation is that notice of restoration is required. Thus, VTB submits that its termination was effective because 538 Madison failed within one year of VTB’s invocation of its termination option to provide written notice that the premises had been restored.

In the absence of any ambiguity, we look solely to the language used by the parties to discern the contract’s meaning. According to rider paragraph 3, a tenant’s casualty-based termination will occur only in one circumstance—when, after receiving notice of the tenant’s intent to terminate the tenancy, the owner fails to restore the premises within the prescribed one-year time frame. There is neither an explicit requirement that the owner give the tenant notice that the rental premises have been restored, nor any provision allowing the tenant to terminate the lease based on the lack of such notice.

Reading the lease’s casualty-related provisions together does not alter our determination. Article 9’s written notice component deals exclusively with the tenant’s liability for rent, and there is no indication in rider paragraph 3 that the parties intended that written notice requirement to affect the owner’s ability to prevent termination of the lease merely by restoring the premises in a timely fashion. Indeed, article 9 expressly provides that, in the event of a casualty, the lease “shall continue in full force and effect except as hereinafter set forth.”

Assuming that the premises had been timely restored, it would presumably have been in 538 Madison’s financial interest to provide written notice of the completed restoration as soon as possible in order to trigger VTB’s obligation to pay rent. The logic of this proposition, however, does not justify judicial insertion of a contract term. The parties could have negotiated and included an explicit notice requirement regarding completion of restoration within the time period set forth in paragraph 3 of the rider (see Rowe, 46 NY2d at 72). They did not do so. We therefore conclude that the lease was not terminated by virtue of 538 Madison’s failure to furnish written notice of restoration and VTB’s motion for summary judgment on this theory should have been denied.

Nor is VTB entitled to summary judgment on its alternative argument that the restoration was incomplete. Pursuant to the contract, VTB could have properly terminated the lease if 538 Madison did, in fact, fail to restore the premises within one year. On this record, however, we cannot determine whether the lease terminated or continued in effect at the expiration of that period because a threshold issue of fact remains as to whether the restoration was substantially complete within one year of VTB’s notice to 538 Madison.

Accordingly, the order of the Appellate Division should be reversed, with costs, and VTB’s motion for summary judgment should be denied.

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

Order reversed, etc.

      . In 532 Madison Ave. Gourmet Foods v Finlandia Ctr. (96 NY2d 280 [2001]), we addressed negligence claims against the owners of 540 Madison Avenue in connection with this incident.

      . By agreeing to the standard form provision regarding a casualty loss, VTB waived the option set forth in Real Property Law § 227 that permits a lessee of a destroyed property to “quit and surrender possession of the leasehold premises, and of the land so leased or occupied; and he or she is not liable to pay to the lessor or owner, rent for the time subsequent to the surrender.”

      . The letter also indicated that VTB had previously advised 538 Madison of its intention to vacate the premises after the 1997 holiday season for business reasons unrelated to the casualty. VTB therefore requested the owner’s assistance in obtaining a successor tenant.


author: G.B. Smith, J.

text:
    [807 NE2d 865, 775 NYS2d 754]
    MetLife Auto & Home, as Subrogee of Michael Basil, Appellant, v Joe Basil Chevrolet, Inc., et al., Respondents, et al., Defendants.
    Argued January 7, 2004;
    decided February 24, 2004

      POINTS OF COUNSEL

      Regan & Regan, Buffalo (Lawrence J. Regan of counsel), for appellant.
    I. Royal had a duty to preserve the fire-damaged vehicle and should therefore be accountable to MetLife as its breach of that duty has proximately damaged MetLife. (Glanzer v Shepard, 233 NY 236; Palsgraf v Long Is. R.R. Co., 248 NY 339; Palka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579; Sporty v Honeywell, Inc., 274 AD2d 321; Ripepe v Crown Equip. Corp., 293 AD2d 462; McAllister v Renu Indus. Tire Corp., 202 AD2d 556; Coley v Ogden Mem. Hosp., 107 AD2d 67; Pirocchi v Liberty Mut. Ins., 365 F Supp 277.) II. Spoliation of evidence as an independent tort should be recognized in New York on the facts presented in this case. (Weigl v Quincy Specialties Co., 158 Misc 2d 753; Curran v Auto Lab Serv. Ctr., 280 AD2d 636; DiDomenico v C & S Aeromatik Supplies, 252 AD2d 41; Fada Indus. v Falchi Bldg. Co., 189 Misc 2d 1; Atlantic Mut. Ins. Co. v Sea Transfer Trucking Corp., 264 AD2d 659; Squitieri v City of New York, 248 AD2d 201; Kirkland v New York City Hous. Auth., 236 AD2d 170; Mudge, Rose, Guthrie, Alexander & Ferdon v Penguin A.C. Corp., 221 AD2d 243; Tawedros v St. Vincent’s Hosp., 281 AD2d 184; Battalla v State of New York, 10 NY2d 237.) II. The spoliation doctrine is one based on fairness and justice and is not based upon what the spoliated evidence would have shown or whom it may have benefited. (Puccia v Farley, 261 AD2d 83; Mudge, Rose, Guthrie, Alexander & Ferdon v Penguin A.C. Corp., 221 AD2d 243; Sage Realty Corp. v Proskauer Rose, 275 AD2d 11; New York Cent. Mut. Fire Ins. Co. v Turnerson’s Elec., 280 AD2d 652; Liz v Zinsser & Co., 253 AD2d 413; Kirkland v New York City Hous. Auth., 236 AD2d 170; Cabasso v Goldberg, 288 AD2d 116; Yi Min Ren v Professional Steaming-Cleaning, 271 AD2d 602; Freedman & Son v A.I. Credit Corp., 226 AD2d 1002; Story Parchment Co. v Paterson Parchment Paper Co., 282 US 555.) IV The order of the Appellate Division should be reversed to allow discovery to proceed into the nature and circumstances surrounding Royal’s spoliation. (Weigl v Quincy Specialties Co., 158 Misc 2d 753; DiDomenico v C & S Aeromatik Supplies, 252 AD2d 41; Anteri v NRS Constr. Corp., 117 AD2d 696; Ricco v Deepdale Gardens Apts. Corp., 113 AD2d 822; Hyosung [Am.] v Woodcrest Fabrics, 106 AD2d 298.) V Summary judgment should be granted against Royal and Joe Basil Chevrolet, Inc. by virtue of Royal’s spoliation of evidence. (Zuckerman v City of New York, 49 NY2d 557.)

      Kenney, Shelton, Liptak & Nowak, L.L.P., Buffalo (Nelson E. Shule, Jr., Joanneke K.M. Brentjens and Michael C. O’Neill of counsel), for Joe Basil Chevrolet, Inc., respondent.
    I. The Appellate Division correctly held that New York does not recognize spoliation as an independent cause of action as to a nonparty. (Huber v Henley, 669 F Supp 1474; Pharr v Cortese, 147 Misc 2d 1078.) II. The “pitfalls” associated with the independent tort of spoliation outweigh any benefits of its recognition. (Foster v Lawrence Mem. Hosp., 809 F Supp 831; Baliotis v McNeil, 870 F Supp 1285; Edwards v Louisville Ladder Co., 796 F Supp 966.) III. Should the Court find that spoliation of evidence is an independent tort, Joe Basil Chevrolet, Inc. is not liable for the actions of Royal. (Kirkland v New York City Hous. Auth., 236 AD2d 170; Batas v Prudential Ins. Co. of Am., 281 AD2d 260; Hartford Acc. & Indem. Co. v Michigan Mut. Ins. Co., 93 AD2d 337.)

      Gibson, McAskill & Crosby, LLP, Buffalo (Victor Alan Oliveri and Timothy J. Graber of counsel), for Royal Insurance Company, respondent.
    I. MetLife failed to state a cause of action against Royal either under principles of negligence law or as an independent tort. (Foncette v LA Express, 295 AD2d 471; Marro v St. Vincent’s Hosp. & Med. Ctr. of N.Y., 294 AD2d 341; Sage Realty Corp. v Proskauer Rose, 275 AD2d 11, 96 NY2d 937; Yi Min Ren v Professional Steam-Cleaning, 271 AD2d 602; Fada Indus. v Falchi Bldg. Co., 189 Misc 2d 1; Weigl v Quincy Specialties Co., 158 Misc 2d 753; Black Radio Network, Inc. v NYNEX Corp., 44 F Supp 2d 565; Pharr v Cortese, 147 Misc 2d 1078; Steinman v Barclays Bank, 276 AD2d 436; Fairclough v Hugo, 207 AD2d 707.) II. New York’s public policy is furthered by placing the burden for preserving evidence on the party seeking its preservation. III. MetLife has failed to present any reason for this Court to recognize a cause of action for third-party spoliation against Royal. (Matter of Granger & Sons v State of New York Facilities Dev. Corp., 207 AD2d 596; Mulligan v Lackey, 33 AD2d 991; Glanzer v Shepard, 233 NY 236; Palsgraf v Long Is. R.R. Co., 248 NY 339; Palka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579; Sporty v Honeywell, Inc., 274 AD2d 321; Weigl v Quincy Specialties Co., 158 Misc 2d 753.)
   OPINION OF THE COURT

G.B. Smith, J.

The primary issue here is whether New York State should recognize a cause of action for third-party negligent spoliation of evidence and impairment of a claim or defense as an independent tort. We decline to recognize it on these facts.

In March 2000, a fire started in a 1999 Chevrolet Tahoe owned by defendant Joe Basil Chevrolet, Inc., and used, with permission, by Michael Basil. At the time of the fire, the vehicle was parked in the garage attached to the home of Faith and Michael Basil in Clarence, New York. The fire caused over $330,000 in property damage to their home. Plaintiff-appellant, MetLife, Michael Basil’s homeowners’ insurance carrier, paid the homeowners’ claim.

Fire and sheriff investigators determined that the fire originated on the driver’s side of the vehicle dashboard. After indemnifying Chevrolet, Royal (Chevrolet’s insurance carrier) took possession of the vehicle, and a representative of Royal agreed in a telephone conversation to preserve the vehicle. Representatives of MetLife, defendant General Motors Corporation (which manufactured the vehicle), Speaker Shop, Inc. (which installed a remote starting device in the dashboard) and Royal arranged for a joint inspection and testing of the vehicle in early November 2000 at the lot where Royal stored the vehicle. Before an inspection took place, Royal notified the parties that the vehicle had been disassembled and disposed of and that scientific analysis and examination were no longer possible.

As Michael Basil’s subrogee, MetLife then commenced this action for money damages. MetLife brought the first three causes of action for negligence, breach of warranty and strict liability against Chevrolet, GMC and Speaker Shop. The fourth cause of action, the sole cause at issue on this appeal, brought solely against Royal, alleged that “as a result of the negligence, carelessness and recklessness of [Royal], invaluable, necessary and important evidence has been destroyed and lost[,] thereby irrevocably impairing [MetLife’s] right to pursue successfully the defendants, Joe Basil Chevrolet, Inc., General Motors Corporation and Speaker Shop, Inc.”

In lieu of answering, Royal moved to dismiss MetLife’s complaint, as well as all cross claims interposed against it, arguing that MetLife failed to state a cognizable cause of action. MetLife cross-moved to dismiss Royal’s affirmative defenses or for summary judgment as against defendants Royal and Chevrolet. Supreme Court granted Royal’s motion to dismiss the complaint, holding that no action against a third party for spoliation of evidence exists in New York, and the Appellate Division affirmed. The Court concluded that Supreme Court properly dismissed the complaint because no cause of action exists in New York for “third-party spoliation” of evidence/impairment of claim or defense, either under the principles of negligence law or as an independent tort. This Court granted leave to appeal. We now affirm.

On this appeal MetLife argues that Royal had a duty to preserve the damaged vehicle and that Royal’s failure to preserve the vehicle supports a cause of action for spoliation of evidence as an independent tort. Even if there were no duty to preserve the evidence, MetLife argues, Royal assumed that duty by agreeing in a telephone conversation that it would preserve the evidence and MetLife detrimentally relied on that promise. Defendants counter that a cause of action for spoliation should not be recognized as an independent tort or under a contract theory, that the burden of preserving evidence should be upon the party seeking its preservation and that no policy reason exists for making a third party liable for spoliation of evidence. There is no allegation in this case that the vehicle was deliberately destroyed in order to prevent an examination. Rather the allegation is that the evidence was destroyed “as a result of the negligence, carelessness and recklessness of the defendant.”

DISCUSSION

A cause of action for spoliation of evidence is a relatively recent phenomenon in the law (see Benjamin T. Clark, The License to Spoliate Must Be Revoked: Why Missouri Should Recognize a Tort for Third-Party Spoliation, 59 J Mo B 308 [2003]; Stefan Rubin, Tort Reform: A Call for Florida to Scale Back Its Independent Tort for the Spoliation of Evidence, 51 Fla L Rev 345 [1999]; Bart S. Wilhoit, Spoliation of Evidence: The Viability of Four Emerging Torts, 46 UCLA L Rev 631 [1998]).

One traditional method of dealing with spoliation of evidence in New York has been CPLR 3126 where sanctions, including dismissal, have been imposed for a party’s failure to disclose relevant evidence (see e.g. New York Cent. Mut. Fire Ins. Co. v Turnerson’s Elec., 280 AD2d 652 [2d Dept 2001]).

Similarly, the Appellate Divisions have held that spoliation of evidence by an employer may support a common-law cause of action when such spoliation impairs an employee’s right to sue a third-party tortfeasor. For example, in DiDomenico v C & S Aeromatik Supplies (252 AD2d 41 [2d Dept 1998]), the Appellate Division invoked the rule against plaintiff’s employer, United Parcel Service, after the employee’s eye was damaged by a caustic liquid sprayed from a package he was handling. DiDomenico had requested the cooperation of UPS in identifying the manufacturer, packer and shipper of the caustic liquid that injured him. UPS not only failed to preserve the package containing the liquid but also delayed in providing appropriate records. As a result, DiDomenico could not sustain an action against the manufacturer and the manufacturer could not defend itself against a claim.

The Appellate Division struck the answer of UPS pursuant to CPLR 3126, noting that

“Separate and apart from CPLR 3126 sanctions is the evolving rule that a spoliator of key physical evidence is properly punished by the striking of its pleading. This sanction has been applied even if the destruction occurred through negligence rather than wilfulness, and even if the evidence was destroyed before the spoliator became a party, provided it was on notice that the evidence might be needed for future litigation” (252 AD2d at 53; see also Kirkland v New York City Hous. Auth., 236 AD2d 170 [1st Dept 1997]).

The case at bar is substantially different from DiDomenico in that at no time did MetLife seek or obtain a court order to compel the preservation of the vehicle. As MetLife acknowledges, it could have sought pre-action disclosure or a temporary restraining order. It also could have bought the car from Royal, offered to pay the costs associated with preservation or commenced suit and issued a subpoena duces tecum to Royal. MetLife did none of these things.

In other instances, New York courts have specifically rejected a cause of action for spoliation of evidence (Monteiro v R.D. Werner Co., 301 AD2d 636 [2d Dept 2003] [municipal employer had no duty to preserve a scaffold which allegedly caused plaintiffs injuries and the municipality was not on notice that an action was contemplated against a third party]; Ripepe v Crown Equip. Corp., 293 AD2d 462 [2d Dept 2002] [employer had no duty to preserve a pallet jack which had rolled over the plaintiffs foot and no cause of action for spoliation of evidence could be brought because it was not on notice that the evidence would be needed for litigation]; Curran v Auto Lab Serv. Ctr., 280 AD2d 636 [2d Dept 2001] [plaintiff could not bring a third-party action against his employer for failure to preserve a truck destroyed in an accident because the employer was not on notice to preserve it]).

In this case it is clear that Royal had no duty to preserve the vehicle. There is no dispute that Royal owned the vehicle. Moreover, no relationship existed between MetLife and Royal that would give rise to such a duty. Additionally, MetLife made no effort to preserve the evidence by court order or written agreement. Although MetLife verbally requested the preservation of the vehicle, it never placed that request in writing or volunteered to cover the costs associated with preservation. The burden of forcing a party to preserve when it has no notice of an impending lawsuit, and the difficulty of assessing damages militate against establishing a cause of action for spoliation in this case, where there was no duty, court order, contract or special relationship.

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

Chief Judge Kaye and Judges Ciparick, Rosenblatt, Graffeo and Read concur; Judge R.S. Smith taking no part.

Order affirmed, with costs.

      . Although claims remain pending as to the other defendants, all claims and cross claims asserted by or against defendant Royal have been dismissed.

      . In Smith v Superior Ct. (151 Cal App 3d 491, 496, 198 Cal Rptr 829, 832 [1984]), the Court of Appeal held that the facts warranted a new tort “to cover the intentional spoliation of evidence.” In two recent cases, however, the Supreme Court of California has rejected a cause of action for the intentional spoliation of evidence by a party to the litigation and by a third party (Cedars-Sinai Med. Ctr. v Superior Ct., 18 Cal 4th 1, 954 P2d 511 [1998]; Temple Community Hosp. v Superior Ct., 20 Cal 4th 464, 976 P2d 223 [1999]). While some states, following Smith, have recognized a cause of action for spoliation of evidence, others have not.


text:
    [808 NE2d 340, 776 NYS2d 205]
    New York Telephone Company, Appellant, v Nassau County et al., Respondents. (Action No. 1.) In the Matter of New York Water Service Corporation, Appellant, v Nassau County et al., Respondents. (Proceeding No. 1.) In the Matter of Long Island Water Corporation, Appellant, v Nassau County et al., Respondents. (Proceeding No. 2.)
    Argued February 11, 2004;
    decided March 30, 2004

      POINTS OF COUNSEL

      Cullen and Dykman Bleakley Platt LLP, Brooklyn (Peter J. Mastaglio, Karen I. Levin, Robert J. Sorge and Jo-Ellen P Holbrook of counsel), for New York Telephone Company, appellant.
    I. The record contains no support for the Second Department’s order. (Crawford v Merrill Lynch, Pierce, Fenner & Smith, 35 NY2d 291; Garza v VICO Util., 150 AD2d 522; Broida v Bancroft, 103 AD2d 88; Matter of Bowery Sav. Bank v Board of Assessors, 80 NY2d 961.) II. In modifying the Supreme Court’s order, the Appellate Division misapplied and disregarded the relevant law. (Gandolfi v City of Yonkers, 101 AD2d 188, 62 NY2d 604, 995; Matter of Andresen v Rice, 277 NY 271; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Foss v City of Rochester, 65 NY2d 247; Matter of Bauer v Board of Assessment Review, 114 Misc 2d 640, 91 AD2d 1097; Hurd v City of Buffalo, 41 AD2d 402, 34 NY2d 628; Lemon v Kurtzman, 411 US 192; Waldert v City of Rochester, 44 NY2d 831, 439 US 922; Jones v City School Dist. of City of Geneva, 44 NY2d 831; Bethlehem Steel Corp. v Board of Educ., 44 NY2d 831.) III. In modifying the Supreme Court’s order, the Second Department has created new and troubling public policy and case law. (Grant Co. v Srogi, 52 NY2d 496; City of Rochester v Chiarella, 58 NY2d 316,
      cert denied sub nom. Quality Packaging Supply Corp. v City of Rochester, 464 US 828; Mercury Mach. Importing Corp. v City of New York, 3 NY2d 418, 942; Long Is. Light. Co. v Office of Supervisor of Town of N. Hempstead, 233 AD2d 300, 89 NY2d 1029.) IV In modifying the Supreme Court’s order, the Second Department has denied appellant its due process and equal protection rights under the Constitutions of both the United States and the State of New York. (McKesson Corp. v Division of Alcoholic Beverages & Tobacco, 496 US 18; Iowa-Des Moines Natl. Bank v Bennett, 284 US 239; Carpenter v Shaw, 280 US 363; Montana Natl. Bank of Billings v Yellowstone County, Mont., 276 US 499; Ward v Board of County Commrs. of Love County, Okla., 253 US 17; Atchison, Topeka & Santa Fe Ry. Co. v O’Connor, 223 US 280; Central Sav. Bank v City of New York, 280 NY 9, 306 US 661; Newsweek, Inc. v Florida Dept. of Revenue, 522 US 442; Reich v Collins, 513 US 106; City of Cleburne, Tex. v Cleburne Living Ctr., 473 US 432.)

      Huber Lawrence & Abell, New York City (Theodore F. Duver of counsel), for New York Water Service Corporation and another, appellants.
    I. Under New York law, a taxpayer who pays under protest a disputed tax, which is later determined to be illegal, is entitled to a refund of the overpayment. (Grant Co. v Srogi, 52 NY2d 496; City of Rochester v Chiarella, 58 NY2d 316, cert denied sub nom. Quality Packaging Supply Corp. v City of Rochester, 464 US 828; Mercury Mach. Importing Corp. v City of New York, 3 NY2d 418; Adrico Realty Corp. v City of New York, 250 NY 29; City of Rochester v Chiarella, 100 AD2d 46, 65 NY2d 92; Gandolfi v City of Yonkers, 101 AD2d 188, 62 NY2d 604, 882, 995.) II. The record does not support; the Second Department’s conclusion that refunds would cause a “significant financial impact.” (Matter of Long Is. Light. Co. v Assessor for Town of Brookhaven, 202 AD2d 32, 85 NY2d 809.) III. The Second Department’s attempt to apply case law which is factually inapposite is erroneous. (Matter of Andresen v Rice, 277 NY 271; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Foss v City of Rochester, 65 NY2d 247; Matter of Bauer v Board of Assessment Review, 114 Misc 2d 640, 91 AD2d 1097; Matter of Teuchtler v Board of Assessors of Town of Cape Vincent, 94 Misc 2d 167; Hurd v City of Buffalo, 41 AD2d 402, 34 NY2d 628; Lemon v Kurtzman, 411 US 192.)

      Loma B. Goodman, County Attorney, Mineóla (Elizabeth D. Botwin of counsel), for respondents.
    I. Article 18 of the Real Property Tax Law applies to the Nassau County assessment roll for all purposes. (Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; Matter of Fappiano v New York City Police Dept., 95 NY2d 738; Matter of Raritan Dev. Corp. v Silva, 91 NY2d 98; Bluebird Partners v First Fid. Bank, 97 NY2d 456; Tran v New Rochelle Hosp. Med. Ctr., 99 NY2d 383; Matter of Colt Indus. v Finance Adm’r of City of N.Y., 54 NY2d 533; Tilles Inv. Co. v Gulotta, 288 AD2d 303, 98 NY2d 605; Matter of Chasalow v Board of Assessors of County of Nassau, 202 AD2d 499, 83 NY2d 759; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Matter of Aaron J., 80 NY2d 402.) II. The class system of article 18 of the Real Property Tax Law is constitutional. (Matter of Consolidated Edison Co. of N.Y. v State Bd. of Equalization & Assessment, 67 NY2d 783; Foss v City of Rochester, 65 NY2d 247; Matter of Colt Indus. v Finance Adm’r of City of N.Y., 54 NY2d 533; Tilles Inv. Co. v Gulotta, 288 AD2d 303, 98 NY2d 605; Trump v Chu, 65 NY2d 20; Port Jefferson Health Care Facility v Wing, 94 NY2d 284; Town of Tonawanda v Alyer, 68 NY2d 836; Matter of Walker v Board of Assessors, 66 NY2d 702; Matter of Slewett & Farber v Board of Assessors of County of Nassau, 54 NY2d 547.) III. The Appellate Division properly exercised its discretion to award prospective relief. (Foss v City of Rochester, 65 NY2d 247; Matter of Hellerstein v Assessor of Town of Islip, 37 NY2d 1; Matter of Andresen v Rice, 277 NY 271; Matter of Bowery Sav. Bank v Board of Assessors, 80 NY2d 961; Long Is. Light. Co. v Assessor of Town of Brookhaven, 154 AD2d 188.) IV The water companies’ appeal is untimely. (Ressis v Herman, 69 NY2d 1017; Monaghan v Yang, 69 NY2d 945.)
   OPINION OF THE COURT

G.B. Smith, J.

The primary issue here is whether the Appellate Division abused its discretion when it held that, owing to the County’s financial situation, certain utilities were not entitled to county tax refunds, even though the Court found that they had been improperly assessed a tax. We reverse the order of the Appellate Division and remit for a hearing both on the amount of refund due and on any financial hardship the County would suffer as a result of requiring payment to the utilities.

Under article 18 of the Real Property Tax Law, Nassau County is a “special assessing unit” for real property taxation. The County’s real property is divided into four classes: classes one and two include all residential property, class three includes utility property and class four includes commercial property.

Plaintiff New York Telephone Company (NYNEX) owns class three and class four property in Nassau County, which is subject to county, town, village, school district and countywide special district taxes. Some of this property is also located in countywide and noncountywide “special districts.” As part of the 1997 tax assessment process, the County imposed special ad valorem levies on noncountywide special districts—including property owned by NYNEX. The County assessed the real property in the noncountywide special districts using the same method as countywide assessments under RPTL article 18.

In April 1997, NYNEX commenced an action seeking a declaration that this method of assessing real property in noncountywide special districts violated the RPTL, enjoining the County from assessing noncountywide property in this manner and demanding a tax overpayment refund. After joinder of issue, NYNEX moved for summary judgment on the issue of liability, and the County cross-moved for summary judgment dismissing the complaint. NYNEX commenced a second action seeking similar relief for the 1998 tax year.

Petitioners New York Water Service Corporation and Long Island Water Corporation (collectively, the Water Companies) owned class three special franchise property in Nassau County in countywide and noncountywide special districts. As in the NYNEX action, the County imposed special ad valorem levies on those properties in the noncountywide special districts. In April 1997, the Water Companies each initiated a CPLR article 78 proceeding to recover tax overpayments due to the County’s alleged unauthorized assessment method. Thereafter, the Water Companies and the County stipulated that the proceedings would also cover the 1998-2000 tax years.

Supreme Court granted the County’s motion to consolidate the various suits, and (1) granted the relief requested by the plaintiffs and petitioners (collectively the utilities), (2) enjoined the County from assessing real property in noncountywide special districts pursuant to RPTL article 18 and (3) referred the issue of damages to trial. Upon reargument, the court adhered to its decision.

The Appellate Division modified the order of the Supreme Court to the extent of precluding payment of the refunds, and, as modified, affirmed, stating:

“Although the tax assessments were invalid, NYNEX and the Water Companies are not entitled to retroactive monetary relief. The record reveals that the payment of tax refunds will have a significant financial impact in many non-Countywide special districts, where taxes have been paid, tax liens matured, budgets adopted, and expenditures made, all in reliance on the ad valorem levies. Under these circumstances, the courts should exercise restraint and not act so as to ‘cause disorder and confusion in public affairs even though there may be a strict legal right.’ Accordingly, the Supreme Court improvidently exercised its discretion in authorizing tax refunds and directing a trial to determine their amount.” (297 AD2d 663, 666 [2002] [citations omitted].)

The Appellate Division denied the utilities’ motions to reargue or for leave to appeal. This Court granted the utilities’ motions for leave to appeal, and we now reverse. We do not reach the propriety of the tax assessment. The County did not appeal that portion of the Appellate Division order.

DISCUSSION

The sole question before us is whether the Appellate Division erred in denying tax refunds to the utilities because of the financial impact such refunds would have on the County when the amount of the refunds had not been established, nor proof submitted demonstrating the impact the refunds would have on the County.

In some circumstances, notwithstanding that a party prevailed on the merits, this Court has refused to grant the relief requested based on the effect it would have on the municipality. For example, in Foss v City of Rochester (65 NY2d 247, 260 [1985]), plaintiff challenged the constitutionality of section 305 and article 19 of the Real Property Tax Law as well as Local Law No. 6 (1983) of the City of Rochester on the ground that they deprived him of due process and of the equal protection of the law. Although the Court determined that article 19 and Rochester Local Law No. 6 violated the Equal Protection Clauses of the Federal and State Constitutions, it refused to require a retroactive refund because of the practical reality that the government had “relied upon the revenues derived from implementing [RPTL article 19] and would suffer an undue burden if it had to refund the taxes collected” (65 NY2d at 260).

Retroactive relief, similarly, was denied in Matter of Hellerstein v Assessor of Town of Islip (37 NY2d 1 [1975]), where the Town’s assessment rolls were held invalid, because the result could bring financial chaos to the Town. In Matter of Andresen v Rice (277 NY 271, 282 [1938]), this Court invalidated a statute that provided for the appointment of State Police officers without a competitive examination but declined to grant the relief requested because it would “cause disorder and confusion in public affairs.”

Here, Supreme Court declined to hear evidence of hardship. Thus, the amount of refund to which the utilities are entitled— including any financial impact on the County of requiring payment—must be determined at a hearing, upon submission of proof.

Accordingly, the order of the Appellate Division, insofar as appealed from, should be reversed, with costs, and the cases remitted to Supreme Court for further proceedings in accordance with this opinion.

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

Order, insofar as appealed from, reversed, etc.

      . New York Telephone Company is now known as Verizon New York, Inc., a wholly owned subsidiary of NYNEX Corp., which is a wholly owned subsidiary of Verizon Communication. “County” as used herein includes the various defendant entities related to Nassau County.

      . A special district is a “county improvement district. . . established for the purpose of carrying on, performing or financing one or more improvements or services intended to benefit the health, welfare, safety or convenience of the inhabitants of such district or to benefit the real property within such district, and in which real property is subject to special ad valorem levies or special assessments for the purposes for which such district was established” (RPTL 102 [16]).

      . Special franchise property is property owned by utilities located in easements in public streets.

      . As the Appellate Division noted, the Legislature subsequently amended RPTL article 18 to include noncountywide special districts in “adjusted base proportion” calculations, thereby allowing prospective application of article 18 to noncountywide special districts in a manner similar to the methodology previously employed for other classifications (see L 2001, ch 191).

      . NYNEX estimates its refund to be approximately 10 million dollars, less than one half of one percent of the taxes the County collected for that year. The Water Companies estimate that their refund would be approximately one million dollars each.