author: Read, J.

text:
    [944 NE2d 1113, 919 NYS2d 474]
    In the Matter of Frances Balzarini, as Administrator of the Estate of John Balzarini, Deceased, Respondent, v Suffolk County Department of Social Services et al., Appellants.
    Argued January 11, 2011;
    decided February 15, 2011

      POINTS OF COUNSEL

      Andrew M. Cuomo, Attorney General, New York City (Steven C. Wu, Barbara D. Underwood, Richard Dearing and Karen Schoen of counsel), for New York State Department of Health, appellant.
    The Department of Health reasonably determined that Frances Balzarini did not establish “exceptional circumstances” justifying an increase in the statutory allowance. (Matter of Tomeck, 8 NY3d 724; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Graubard Mollen Dannett & Horowitz v Moskovitz, 86 NY2d 112; Hecht v City of New York, 60 NY2d 57; Matter of Transitional Servs. of N.Y. for Long Is., Inc. v New York State Off. of Mental Health, 13 NY3d 801; Rosner v Metropolitan Prop. & Liab. Ins. Co., 96 NY2d 475; Matter of Schachner v Perales, 85 NY2d 316; Matter of Brown v Wing, 93 NY2d 517; Cricchio v Pennisi, 90 NY2d 296; Matter of White v White, 229 AD2d 296.)

      Christine Malafi, County Attorney, Central Islip (Christopher A. Jeffreys and Karin A. Bohrer of counsel), for Suffolk County Department of Social Services, appellant.
    I. The Department of Health’s determination that ordinary living expenses do not qualify as “exceptional circumstances” is rational and supported by the plain language of the statute and regulations. (Matter of Berenhaus v Ward, 70 NY2d 436; 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176; Rainer N. Mittl, Ophthalmologist, P.C. v New York State Div. of Human Rights, 100 NY2d 326; Matter of Kelly v Safir, 96 NY2d 32; Matter of Jennings v New York State Off. of Mental Health, 90 NY2d 227; Matter of Albano v Board of Trustees of N.Y. City Fire Dept., Art. II Pension Fund, 98 NY2d 548; Matter of Dworman v New York State Div. of Hous. & Community Renewal, 94 NY2d 359; Seenaraine v Securitas Sec. Servs. USA, Inc., 37 AD3d 700, 9 NY3d 813; Matter of Visiting Nurse Serv. of N.Y. Home Care v New York State Dept. of Health, 5 NY3d 499; Matter of Orens v Novello, 99 NY2d 180.) II. The Medicare Catastrophic Coverage Act and related federal guidelines do not support the Second Department’s determination that ordinary living expenses can qualify as exceptional circumstances resulting in significant financial distress. (Chevron U.S.A. Inc. v Natural Resources Defense Council, Inc., 467 US 837; Morton v Ruiz, 415 US 199; Arkansas Dept. of Health & Human Servs. v Ahlborn, 547 US 268; Skidmore v Swift & Co., 323 US 134; Wong v Doar, 571 F3d 247; Estate of Landers v Leavitt, 545 F3d 98; Community Health Ctr. v Wilson-Coker, 311 F3d 132; Morenz v Wilson-Coker, 415 F3d 230; Wisconsin Dept. of Health & Family Servs. v Blumer, 534 US 473; Rabin v Wilson-Coker, 362 F3d 190.) III. The holdings of this Court support the interpretation of “exceptional circumstances” as being circumstances beyond the community spouse’s control. (Matter of Gomprecht v Gomprecht, 86 NY2d 47; Matter of Schachner v Perales, 85 NY2d 316; Matter of Tomeck, 8 NY3d 724.)

      Lewis C. Edelstein, Garden City and Gary S. Josephs, Setauket, for respondent.
    I. The Appellate Division, Second Department’s decision should be affirmed. (Matter of Schachner v Perales, 85 NY2d 316; Matter of Golf v New York State Dept. of Social Servs., 91 NY2d 656; Matter of White v White, 229 AD2d 296; Matter of Bertha M. v Pedro M., 4 Misc 3d 1017[A], 2004 NY Slip Op 50918[U]; Matter of Gomprecht v Gomprecht, 86 NY2d 47; Calvanese v Calvanese, 93 NY2d 111; Wisconsin Dept. of Health & Family Servs. v Blumer, 534 US 473; Matter of Shah [Helen Hayes Hosp.], 257 AD2d 275; Matter of Tomeck, 8 NY3d 724; Chevron U.S.A. Inc. v Natural Resources Defense Council, Inc., 467 US 837.) II. The Appellate Division, Second Department used the correct standard of judicial review in making its determination that the Department of Health’s determination in the fair hearing lacked a rational basis and was not supported by substantial evidence. (NLRB v Food & Commercial Workers, 484 US 112; United States v American Trucking Assns., Inc., 310 US 534; Matter of Jennings v New York State Off. of Mental Health, 90 NY2d 227; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Dworman v New York State Div. of Hous. & Community Renewal, 94 NY2d 359; Seenaraine v Securitas Sec. Servs. USA, Inc., 37 AD3d 700, 9 NY3d 813; Matter of Visiting Nurse Serv. of N.Y. Home Care v New York State Dept. of Health, 5 NY3d 499; 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176; Matter of McCormack v National City Bank of N.Y., 303 NY 5; Matter of Adams [Government Empls. Ins. Co.], 52 AD2d 118.) III. The Second Department should be affirmed in that a “sufficient—but not excessive—amount of income and resources” under Social Services Law § 366-c includes support to pay necessary and reasonable expenses of the community spouse. (Matter of Gomprecht v Gomprecht, 86 NY2d 47; Matter of Albany County Dept. of Social Servs. v Englehardt, 124 AD2d 140; Matter of Lopez v Commissioner of N.Y. State Dept. of Health, 42 AD3d 638; Matter of Allen v Allen, 236 AD2d 470.)
   OPINION OF THE COURT

Read, J.

On this appeal, we hold that “exceptional circumstances” causing “significant financial distress” within the meaning of the joint federal-state Medicaid program do not encompass everyday living expenses in excess of the “minimum monthly maintenance needs allowance” (MMMNA), an amount deemed sufficient by Congress for an individual to live in the community after his or her spouse residing in a nursing home becomes eligible for Medicaid.

I.

Upon entering a nursing home in March 2005, John Balzarini (the husband; in Medicaid parlance, the institutionalized spouse) applied to the Suffolk County Department of Social Services (DSS) for Medicaid benefits. The husband’s total monthly income was $2,542.67, consisting of Social Security and a private pension; when making the Medicaid-eligibility determination, DSS calculated that $2,414.47 of this monthly income was available to pay for the husband’s nursing home expenses, which were then $227.37 per day at the Medicaid rate, or approximately $6,800 per month. The husband’s wife, Frances (the wife; in Medicaid parlance, the community spouse) submitted a spousal refusal letter to DSS (see Matter of Tomeck, 8 NY3d 724, 729-730 [2007]); she had a monthly income of $2,444.77, also from Social Security and a private pension. Since the wife’s income exceeded $2,378, the MMMNA for 2005, DSS did not allocate any of the husband’s available monthly income for the wife’s support. Instead, as of May 1, 2005, the effective date of the husband’s Medicaid coverage, his entire available monthly income of $2,414.47 was paid over to the nursing home, while Medicaid took care of the balance of his monthly nursing home costs of roughly $4,400 ($6,800 - $2,414.47 = $4,385.53).

The husband exercised his right to contest DSS’s determination in a fair hearing conducted by an administrative law judge on behalf of the New York State Department of Health (DOH) (see Social Services Law § 22; 18 NYCRR 358-2.30 [b]; 358-3.1 [g] [l]). He argued that “exceptional circumstances” resulted in the wife’s “significant financial distress” at the level of the MMMNA, justifying an award increasing her monthly income allowance (see 42 USC § 1396r-5 [e] [2] [B]; Social Services Law § 366-c [8] [b]). At the hearing held on December 5, 2005, the husband’s representatives sought to prove that the wife incurred monthly living expenses totaling about $4,800, including mortgage payments, common charges, homeowners’ insurance and real property taxes for the condominium jointly owned by the husband and wife, where the wife still resided; transportation costs (car loan payments and bills for insurance and gasoline); food, clothing, prescription drugs and utility bills; and about $1,500 for a minimum monthly payment on credit card debt of between $25,000 and $30,000, most of which was incurred before the husband entered the nursing home.

In a decision dated December 16, 2005, DOH affirmed DSS’s determination to limit the wife’s income to the MMMNA. The decision cited the legislative history of the Medicare Catastrophic Coverage Act of 1988 (MCCA) (42 USC § 1396r-5), which suggested that “ ‘exceptional circumstances’ are those which are not ordinary and which arise out of an emergency or unanticipated need” (emphasis omitted); and noted that pursuant to 18 NYCRR 360-4.10 (a) (10), “ ‘financial distress’ may result from recurring or extraordinary non-covered medical expenses, amounts to preserve, maintain, or make major repairs to the homestead, and amounts necessary to preserve an income producing asset.” DOH concluded that the evidence presented at the fair hearing failed to fulfill these legal criteria because the wife merely established that her actual living expenses exceeded the MMMNA; “these costs constitute expenses that are to be absorbed by the MMMNA”; and “[b]y their very nature, exceptional circumstances do not include usual household monthly expenses.” The decision also noted that the wife “conceded” that the credit card balances did not reflect expenses for major repairs to the homestead or catastrophic events, and presented “no bills or documentation of unpaid recurring bills” or “verification of any medical costs” that she had incurred.

In April 2006, the husband brought this CPLR article 78. proceeding (now pursued by the wife as administrator of the husband’s estate) to contest DOH’s decision upholding DSS’s determination. He asked Supreme Court to “rais[e] the MMMNA ... to include the unsecured debt of the [institutionalized spouse] and the community spouse”; specifically, the husband claimed that the MMMNA should be increased by $2,536.67 a month. In July 2006, Supreme Court transferred the matter to the Appellate Division (see CPLR 7804 [g]).

In a decision issued in September 2008, the Appellate Division concluded that “[w]ith the exception of the credit card expenses,” where DOH’s determination was supported by substantial evidence, the wife’s “recurring monthly expenses” were “all necessities of daily living” (55 AD3d 187, 194 [2d Dept 2008]). The court further opined that because “reasonable, ordinary expenses can be a sufficient basis upon which additional income of the institutionalized spouse may be made available to the community spouse” (id. at 191), the husband had “established exceptional circumstances with respect to the [wife’s] expenses . . . for housing, utilities, automobile, Medicare, food, clothing, medical care, and home maintenance,” and so DOH’s determination was “not supported by substantial evidence and[ ] . . . must be annulled to that extent” (id. at 195). The Appellate Division accordingly granted the petition in part “since the expenses that are properly considered exceed [the wife’s] income”; and remitted the matter to DOH to calculate an increase in the MMMNA to take into account the wife’s expenses in the specified categories (id.). In January 2009, the court granted DSS and DOH leave to appeal, certifying to us the question of whether its opinion and judgment had been properly made.

II.

The spousal impoverishment provisions of the MCCA form “a complex set of standards . . . designed to insure that the community spouse retains necessary, but not excessive, income and assets, which do not need to be depleted to make the institutionalized spouse eligible for Medicaid” (Tomeck, 8 NY3d at 728). In so doing, Congress corrected “a perceived flaw in the Medicaid program” by eliminating the risk that a community spouse would be reduced to penury (Matter of Golf v New York State Dept. of Social Servs., 91 NY2d 656, 659 [1998]; see also Matter of Schachner v Perales, 85 NY2d 316, 319-320 [1995] [discussing prior law]). New York enacted conforming legislation (Social Services Law § 366-c), and the former New York State Department of Social Services issued implementing regulations (18 NYCRR 360-4.10).

The MCCA requires each state to establish the MMMNA for the community spouse at a level equal to or exceeding 150% of one-twelfth of the federal income official poverty line for a family of two plus an excess shelter allowance for unusually high housing expenses, subject to a cap of $1,500 per month in 1988 dollars (see 42 USC § 1396r-5 [d] [3], [4]). The federal income official poverty line is revised each year, and the cap is indexed to the consumer price index for all urban consumers (see 42 USC § 1396r-5 [d] [3] [A] [i]; [g]). New York has set the MMMNA equal to the statutory cap (see Social Services Law § 366-c [2] [h]); therefore, the MMMNA in New York is the maximum permitted under federal law.

If the community spouse’s income falls below the MMMNA, the institutionalized spouse makes up the difference, assuming he or she possesses sufficient income to do so (see 42 USC § 1396r-5 [d] [1] [B]; [2]; Social Services Law § 366-c [2] [g]; [4] [b] [providing for deduction for this purpose from institutionalized spouse’s monthly income]). Further, if “either . . . spouse establishes that the community spouse needs income, above the level otherwise provided by the [MMMNA], due to exceptional circumstances resulting in significant financial duress,” then “an amount adequate to provide such additional income as is necessary” shall be substituted for the MMMNA (42 USC 1396r-5 [e] [2] [B]). Concomitantly, Social Services Law § 366-c (8) (b) provides that

“[i]f either spouse establishes that the community spouse needs income above the level established by the social services district as the [MMMNA], based upon exceptional circumstances which result in significant financial distress (as defined by the commissioner in regulations), [DOH] shall substitute an amount adequate to provide additional necessary income from the income otherwise available to the institutionalized spouse.”

The implementing regulations, in turn, define “significant financial distress” as

“exceptional expenses which the community spouse cannot be expected to meet from the [MMMNA] or from amounts held in resources. Such expenses may be of a recurring nature or may represent major one time costs, and may include but are not limited to: recurring or extraordinary noncovered medical expenses; amounts to preserve, maintain or make major repairs on the homestead; and amounts necessary to preserve an income-producing asset” (18 NYCRR 360-4.10 [a] [10]).

“Exceptional” means “out of the ordinary” or “uncommon” or “rare” (Webster’s Third New International Dictionary, Unabridged [Merriam-Webster 2002], available at http:// unabridged.merriam-webster.com). As we explained in Schachner, section 366-c of the Social Services Law therefore “contemplates that an increase [in the MMMNA] is available only to alleviate true financial hardship that is thrust upon the community spouse by circumstances over which he or she has no control, as exemplified by the circumstances enumerated in 18 NYCRR 360-4.10 (a) (10)” (Schachner, 85 NY2d at 325 [emphasis added]).

Here, by contrast, the wife seeks an increased award to pay for everyday living expenses. But Congress created the MMMNA precisely to cover just such ordinary and therefore, by definition, non-exceptional items. Indeed, the Centers for Medicare and Medicaid Services, the federal office that oversees Medicaid, has suggested that a reasonable definition for “exceptional circumstances resulting in extreme financial duress” is “[c]ircumstances other than those taken into account in establishing maintenance standards for spouses” (see Centers for Medicare and Medicaid Services, State Medicaid Manual § 3710.1 [10-89] [Rev 39] [emphasis added], available at http://www.cms.hhs.gov/ Manuals/PBM/itemdetail.asp?itemID=CMS021927).

Plainly stated, the spousal impoverishment provisions are not meant to enable the community spouse “to maintain [his or] her prior life-style and have the public subsidize it”—i.e., Medicaid dollars would have to make up for any monies diverted from the institutionalized spouse’s medical care to the community spouse (Matter of Gomprecht v Gomprecht, 86 NY2d 47, 52 [1995] [Family Court may not make an award in an amount greater than MMMNA to community spouse absent showing of exceptional circumstances within meaning of Social Services Law § 366-c]). Instead, “the narrow purpose of the legislation providing for the [MMMNA was] to protect the community spouse from financial disaster when the primary income-providing spouse [became] institutionalized” (Schachner, 85 NY2d at 323). Congress established the MMMNA at an amount it deemed sufficient to achieve this narrow purpose. Thus, the spousal impoverishment provisions do not guarantee a community spouse the same standard of living—even if reasonable rather than lavish by some lights—that he or she enjoyed before the institutionalized spouse entered a nursing home. Congress itself has decided what is a reasonable basic living allowance for the community spouse: the MMMNA. The trade-off for a married couple, of course, is that the institutionalized spouse’s costly nursing home care is heavily subsidized by the taxpayer, as happened here (see supra at 139).

Consequently, substantial evidence supports DOH’s determination denying the wife an increase in the MMMNA. All the wife attempted to show at the fair hearing was that she could not maintain her existing lifestyle if all of the husband’s income was applied toward his medical care. She therefore did not demonstrate that her “significant financial distress” was caused by “exceptional circumstances” within the meaning of the spousal impoverishment provisions of federal and state law.

Accordingly, the order of the Appellate Division insofar as appealed from should be reversed, with costs; the petition dismissed; and the certified question answered in the negative.

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

Order, insofar as appealed from, reversed, etc.

      . Effective October 1, 1996, DOH replaced the former New York State Department of Social Services as the agency responsible for administering the Medicaid program at the state level (see L 1996, ch 474, §§ 233-248; see also Social Services Law § 363-a [1]; Public Health Law § 201 [1] [v]).

      . The fair hearing took place without the husband’s participation. Instead, he was represented by the wife and their son, an accountant, who both testified about the family’s finances, as well as by counsel.

      . The husband apparently died in March 2009.

      . The husband did not seek to cross-appeal; therefore, so much of the Appellate Division’s opinion and judgment as affirmed DOH’s decision regarding credit card debt is beyond our review (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 151 n 3 [2002]).

      . The “excess shelter allowance” of a community spouse is equal to the community spouse’s expenses for rent or mortgage payments, taxes and insurance and, in the case of a condominium or cooperative, required maintenance charges, as well as a utility allowance, to the extent that these housing-related expenses exceed 30% of 150% of one-twelfth of the federal income official poverty line for a family of two (see 42 USC § 1396r-5 [d] [4]; Social Services Law § 366-c [2] [k]).


source: Caselaw Access Project

author: Pigott, J. Chief Judge Lippman (dissenting).

license: Public Domain

text:
    [945 NE2d 447, 920 NYS2d 254]
    The People of the State of New York, Respondent, v Reginald Rabb, Appellant. The People of the State of New York, Respondent, v Steven Mason, Appellant.
    Argued January 4, 2011;
    decided February 15, 2011

      POINTS OF COUNSEL

      Office of the Appellate Defender, New York City (Kerry S. Jamieson and Richard M. Greenberg of counsel), for appellant in the first above-entitled action.
    Where the prosecution’s eavesdropping warrant application for the “Divine” cell phone failed to make a particularized showing that normal investigative measures would be insufficient if employed against “Divine,” the application was insufficient as a matter of law, and the intercepted communications and all other evidence obtained pursuant to the invalid warrant should have been suppressed and the indictments dismissed. (People v Capolongo, 85 NY2d 151; United States v Carneiro, 861 F2d 1171; People v Fonville, 247 AD2d 115; Berger v New York, 388 US 41; United States v Giordano, 416 US 505; People v McGrath, 46 NY2d 12; People v Shapiro, 50 NY2d 747; United States v Gonzalez, Inc., 412 F3d 1102; United States v Ippolito, 774 F2d 1482; United States v Lilla, 699 F2d 99.)

      Center for Appellate Litigation, New York City (Barbara Zolot and Robert S. Dean of counsel), for appellant in the second above-entitled action.
    The prosecution failed to satisfy CPL 700.15 (4)’s “necessity” requirement for obtaining an eavesdropping warrant, where its allegations that “normal investigative procedures” had been tried and had failed, or would not be likely to succeed if tried, were based on an investigation of different suspects and a different enterprise. (Berger v New York, 388 US 41; Olmstead v United States, 277 US 438; People v Capolongo, 85 NY2d 151; People v Kramer, 92 NY2d 529; People v Gallina, 66 NY2d 52; People v Darling, 95 NY2d 530; People v Schulz, 67 NY2d 144; People v Sher, 38 NY2d 600; People v Winograd, 68 NY2d 383; People v Weaver, 12 NY3d 433.)

      Cyrus R. Vance, Jr., District Attorney, New York City (Susan Axelrod and Alan Gadlin of counsel), for respondent in the first and second above-entitled actions.
    Detective Novellino’s March 31, 2005 application for authorization to eavesdrop over Reginald Rabb’s cell phone sufficiently established that alternative techniques either had been tried and failed or were not likely to succeed, if tried. (Berger v New York, 388 US 41; People v Shapiro, 50 NY2d 747; People v McGrath, 46 NY2d 12; People v Teicher, 52 NY2d 638; People v Darling, 95 NY2d 530; People

      v Capolongo, 85 NY2d 151; People v Gallina, 66 NY2d 52; People v Schulz, 67 NY2d 144; People v Weaver, 12 NY3d 433; United States v Kahn, 415 US 143.)
   OPINION OF THE COURT

Pigott, J.

Defendants Reginald Rabb and Steven Mason—who ran P&D Construction Workers Coalition, a minority labor coalition— challenge the People’s March 31, 2005 eavesdropping warrant application on the ground that the People failed to establish that normal investigative measures had been exhausted, were reasonably unlikely to succeed if tried, or were too dangerous to employ (see CPL 700.15 [4]; 700.20 [2] [d]). Supreme Court denied defendants’ motions to suppress and defendants pleaded guilty. The Appellate Division affirmed the judgments upon their guilty pleas, holding that the People’s application adequately explained why normal investigative measures would be reasonably unlikely to succeed if tried (66 AD3d 487 [2009]). Because there is record support for that conclusion, we now affirm.

I.

In 2002, the Labor Racketeering Unit of the New York County District Attorney’s Office (LRU) began investigating the activities of a minority labor coalition called Akbar’s Community Services. Akbar was run by Derrick Walker and his associate Frederick Rasberry, who utilized the coalition to force construction companies, under the threat of vandalism or intimidation, to hire coalition workers and/or pay money for “security” from intimidation from other labor coalitions. During a three-year investigation into Akbar’s practices, the LRU’s investigatory techniques included, among other things, placing a senior LRU investigator undercover as a construction company owner whereby he paid Rasberry $800 a month for “security” from other coalitions and conducting numerous interviews with construction company personnel about Akbar’s practices.

The Akbar investigation uncovered certain coercive techniques engaged in by P&D. During one interview with a construction company president in May 2004, an LRU investigator inquired as to whether he had been contacted by Walker or Rasberry. He responded that he had not, but that he had been contacted by P&D. He produced a business card listing the name “Divine” and a cellular phone number. Upon analyzing the billing records for Walker’s and Rasberry’s cell phones, investigators learned that the “Divine” cell phone number was registered to one Carol Rabb. LRU cross-referenced the number with a minority labor coalition list and discovered that the contact person for P&D went by the name of “Divine Organizer.” Moreover, according to billing records, between January and July 2004, over 70 calls were made between the “Divine” number and the numbers belonging to Walker and Rasberry.

On January 19, 2005, with the support of an affidavit from a senior LRU investigator, the People obtained eavesdropping warrants against the Akbar targets, Walker and Rasberry. Shortly after an extension of the Walker/Rasberry warrant was obtained on February 1, 2005, a representative of another construction company advised an LRU investigator that she had been approached by a P&D “business agent” who demanded that she put workers from the community on the job site, and left her his business card, which had the name “CEO Divine Allah” typed on the card and the same cellular phone number given to the other contractor.

After obtaining a second extension against Walker and Rasberry on March 1, 2005, the People obtained an eavesdropping warrant against Rabb on March 31, 2005, setting forth the same goals that they had relative to the Walker/Rasberry investigation: to determine the full scope of Rabb’s leadership position in P&D and gather sufficient evidence to prosecute the participants in that illegal conduct. The People later obtained an eavesdropping warrant against Mason’s cell phone on November 9, 2005 in furtherance of the same goals.

Defendants were indicted by the New York County grand jury for, among other crimes, enterprise corruption and grand larceny in the second degree. They moved pursuant to CPL 710.20 to suppress evidence obtained from the eavesdropping warrants, claiming that the March 31, 2005 application for the eavesdropping warrant for Rabb’s cell phone—the only application that defendants challenge on this appeal—did not meet the dictates of CPL 700.15 (4). After Supreme Court denied defendants’ respective motions, Rabb pleaded guilty to enterprise corruption, grand larceny in the second degree (two counts), attempted grand larceny in the second degree and criminal possession of a weapon in the fourth degree, and was sentenced as a second felony offender to an aggregate term of 8½ to 17 years’ imprisonment. Mason pleaded guilty to the same crimes—save for the criminal possession of a weapon charge—and was sentenced as a second felony offender to an aggregate term of 7½ to 15 years’ imprisonment. Each defendant appealed the judgment upon his guilty plea to obtain review of the denial of his suppression motion.

The Appellate Division affirmed (66 AD3d 487 [2009]) and a Judge of this Court granted defendants leave to appeal (People v Mason, 13 NY3d 940 [2010], 14 NY3d 759 [2010]; People v Rabb, 13 NY3d 941 [2010]).

II.

Criminal Procedure Law § 700.15 (4) provides that an eavesdropping warrant may issue only “[u]pon a showing that normal investigative procedures have been tried and have failed, or reasonably appear to be unlikely to succeed if tried, or to be too dangerous to employ.”

In addition, an application for an eavesdropping warrant must contain “[a] full and complete statement of facts” establishing that one of the requirements of section 700.15 (4) has been met (CPL 700.20 [2] [d]). It is not coincidental that the language of the aforementioned CPL provisions is substantively identical to federal standards set forth in 18 USC § 2518 (3) (c) and (1) (c), respectively, since it was the Legislature’s intention to “conform ‘State standards for court-authorized eavesdropping warrants with federal standards’ ” (People v McGrath, 46 NY2d 12, 26 [1978], cert denied 440 US 972 [1979], quoting Governor’s Approval Mem, Bill Jacket, L 1969, ch 1147, 1969 NY Legis Ann, at 586; see United States v Lilla, 699 F2d 99, 102 [2d Cir 1983]). These statutory requirements ensure that wiretaps are not routinely employed as an initial step in a criminal investigation and are used only after the applicant states, and the court finds, that the dictates of sections 700.15 (4) and 700.20 (2) (d) have been met (see generally United States v Giordano, 416 US 505, 515 [1974] [referencing the federal statutory counterparts to the state provisions]).

The Legislature sought, through its enactment of CPL article 700, to balance competing policies, namely, the protection of “[t]he right of privacy, to which unsupervised eavesdropping poses a great threat . . . against society’s interest in protecting itself against crime” (Report of New York State Joint Legislative Committee On Crime, Its Causes, Control & Effect on Society, 1968 NY Legis Doc No. 81, at 44). Significantly, the Legislature took special note of the importance of eavesdropping as it related to organized crime, observing that, “[d]ue to the tight structure of organized crime groups, their use of brutal force to discourage informants, and the high degree to which key members have insulated themselves from criminal liability, standard law enforcement techniques generally result in the conviction of only lower echelon rank and file members” of those groups (id.). Then-Governor Rockefeller likewise acknowledged that the eavesdropping law would afford law enforcement “greater flexibility in the employment of eavesdropping as an effective weapon against crime” and, in particular, organized crime, “where the obtaining of evidence for successful prosecutions is often extremely difficult” (Governor’s Approval Mem, Bill Jacket, L 1969, ch 1147, 1969 NY Legis Ann, at 586). With those objectives in mind, we now address the merits of defendants’ arguments.

III.

Defendants do not challenge Supreme Court’s conclusion that the eavesdropping warrant was issued based upon probable cause; it is evident from this record that the People established probable cause to believe that defendants were committing designated criminal offenses and that communications concerning those offenses would be obtained through eavesdropping (see CPL 700.15 [2], [3]). Rather, defendants assert, in essence, that the People improperly utilized eavesdropping as a first step in the Rabb/Mason investigation and failed to provide a particularized showing that normal investigative procedures were unlikely to succeed, relying instead on conclusory statements concerning their experience in the Walker/Rasberry investigation. Defendants further claim that the successful use of physical surveillance, undercover operations, witness interviews and search warrants in the Walker/Rasberry investigation demonstrated that the warrant application here failed to establish that normal investigative procedures were unlikely to succeed against defendants.

We disagree and conclude that there is record support for the findings by Supreme Court and the Appellate Division that the People’s application complied with sections 700.15 (4) and 700.20 (2) (d) (see People v Wheeler, 2 NY3d 370, 373 [2004]). Contrary to defendants’ contention, it is evident from the People’s application that LRU did not resort to wiretapping as a routine, initial step in its investigation of P&D. The application refers to the May 2004 contact between a P&D representative and a construction contractor, explains that the phone number given to the contractor was registered to Carol Rabb, and states that the LRU’s cross-referencing of that number with a list of minority coalitions indicated the name “Divine” and “Divine’s” phone number as contact information for P&D. Moreover, LRU’s undercover officer, who was posing as a construction contractor, asked Rasberry if there were any other coalitions that could cause trouble at his job site, and Rasberry identified P&D as one of them. Finally, analysis of billing records for the “Divine” cell phone unearthed numerous calls to Walker and Rasberry, calls to construction companies with known ties to organized crime, and calls to construction companies that were also contacted by Akbar.

The application also outlined collusive efforts between Akbar and P&D members. For instance, LRU uncovered evidence that between February 2, 2005 and March 25, 2005, there were 63 calls between Walker’s and Rabb’s cell phones, some having been intercepted as a result of the Walker eavesdropping warrant. LRU investigators heard Walker and Rabb discussing collusive efforts between Akbar and P&D, including sharing information about job sites and assisting each other’s coalitions in coercing construction companies to hire their respective coalition members. At that point in the investigation, it was reasonable for LRU to. surmise that Akbar and P&D, although rival coalitions, joined forces when the opportunities presented themselves and that these coalitions shared similar objectives. LRU thereafter tried to identify Rabb by surveilling meetings that had been set up on intercepted calls but these efforts proved unsuccessful. Thus, there is plainly record support that LRU did not resort to eavesdropping as a first step in its investigation of defendants and, to the extent that defendants disagree with the lower courts’ interpretation of the facts in the application, such factual determinations are not further reviewable by this Court (see People v McRay, 51 NY2d 594, 601 [1980]).

There is likewise record evidence supporting the findings of the lower courts that LRU demonstrated that normal investigative procedures were unlikely to succeed. Although eavesdropping may not be used as a routine first step, law enforcement need not “exhaust all conceivable investigative techniques before resorting to electronic surveillance” (United States v Concepcion, 579 F3d 214, 218 [2d Cir 2009]). Indeed, “[a]n affidavit describing the standard techniques that have been tried and facts demonstrating why they are no longer effective is sufficient to support an eavesdropping order even if every other possible means of investigation has not been exhausted’ (United States v Terry, 702 F2d 299, 310 [2d Cir 1983] [emphasis supplied], cert denied sub nom. Williams v United States, 461 US 931 [1983]). Nor is law enforcement “required to resort to measures that will clearly be unproductive” (id.).

CPL 700.20 (2) requires, among other things, that the applicant advise the authorizing judicial officer of the nature and progress of the investigation along with an explanation as to what investigative techniques have been tried and failed or why it would be difficult to employ normal law enforcement techniques. This language “is simply designed to assure that wiretapping is not resorted to in situations where traditional investigative techniques would suffice to expose the crime” (United States v Kahn, 415 US 143, 153 n 12 [1974] [discussing 18 USC § 2518 (1), the federal statutory counterpart to CPL 700.20 (2)]). Of course, the application must include more than “generalized and conclusory statements that other investigative procedures would prove unsuccessful” (Lilla, 699 F2d at 104).

Here, the People provided “some basis for concluding that less intrusive investigative procedures [were] not feasible” (United States v Howard, 350 Fed Appx 517, 519 [2d Cir 2009]). For instance, the LRU investigator explained that physical surveillance was of limited use because, although it might show subjects meeting with each other, it would rarely allow LRU to hear the conversations, and that any attempts by LRU investigators to get closer to the subjects to hear the conversations would render it more likely that the subjects would discover they were under investigation. He explained that, notwithstanding the undercover role he had assumed as a contractor—which was limited to his paying Rasberry $800 a month—other undercover efforts would not have enabled LRU to expose the full scope of Akbar’s activities, and were unlikely to be more successful with P&D. The application further explained the futility of conducting a grand jury investigation because many of the witnesses were participants in the criminal conduct, and victims of that conduct would be unlikely to testify out of fear of retaliation. Furthermore, the issuance of grand jury subpoenas to witnesses and custodians of business records would publicize the investigation, thereby foreclosing the use of other conventional investigatory techniques. Finally, the execution of search warrants would compromise the confidentiality of the investigation and assuredly apprise its targets, increasing the likelihood that they would destroy inculpatory records.

Because the People supported their application with reasons why normal investigative techniques would be ineffective as to Rabb, it is of no moment that they also utilized their experiences from the Walker/Rasberry investigation to inform their allegations against P&D. Contrary to defendants’ contentions, the People did not seek to eavesdrop based solely and primarily on how Akbar operated; the People had learned, through their interception of Walker/Rasberry conversations with P&D, the collusive nature of the relationship between Akbar and P&D, how P&D operated its business, and the similarity of their organizations and objectives. Therefore, it cannot be said that the People relied solely on past investigations into minority labor coalitions in general to support their assertion that normal investigative techniques would be generally unproductive in the P&D investigation (see United States v DiMuro, 540 F2d 503, 510-511 [1st Cir 1976], cert denied 429 US 1038 [1977]).

Equally unavailing is defendants’ argument that, because normal investigatory measures had succeeded in the Walker/ Rasberry investigation—including the use of physical surveillance, undercover operations, witness interviews and search warrants—the warrant application failed to establish that normal investigative measures were unlikely to succeed. The People explained why normal law enforcement techniques would be unlikely to succeed as against these defendants and there was a factual basis for these assertions. “Merely because a normal investigative technique is theoretically possible, it does not follow that it is likely” (Concepcion, 579 F3d at 218 [citation and internal quotation marks omitted]).

IV

Upon conducting our limited review, we are satisfied that there is record support for the conclusions reached by the lower courts that the People’s application demonstrated that normal investigative measures would reasonably have been unlikely to succeed if tried. Accordingly, in each case, the order of the Appellate Division should be affirmed.

Chief Judge Lippman (dissenting).

In 1967, the United States Supreme Court struck down New York State’s eavesdropping statute as unconstitutional (Berger v New York, 388 US 41 [1967]). More than adumbrating what it would do only months later when it issued its decision in Katz v United States (389 US 347 [1967]) overruling Olmstead v United States (277 US 438 [1928]), the Berger Court held that electronic eavesdropping constituted a search within the meaning of the Fourth Amendment (Berger, 388 US at 52-53) and, accordingly, that when the government sought to listen to the private conversations of its citizenry it was obliged first to obtain a warrant from a neutral magistrate issued upon probable cause supported by oath or affirmation, and particularly describing the object of the contemplated intrusion. It followed as well that fruits of unauthorized eavesdropping were subject to the exclusionary rule, which by the time of Berger had been applied to the states (id. at 53, citing Mapp v Ohio, 367 US 643, 655 [1961]).

The New York statute challenged in Berger was deemed facially deficient on numerous grounds, but principally for its failure to meet the Fourth Amendment’s requirement of particularity and for the open-ended authority it conferred upon a successful eavesdropping applicant (388 US at 58-59). These inadequacies were specially troubling given eavesdropping’s “inherent dangers” (id. at 60). The practice, the Court noted, had been historically disfavored and, indeed, universally outlawed, except for law enforcement purposes (id. at 45-49), in which context it remained highly problematic by reason of its unusually intrusive, indiscriminate and insidious capacities. While acknowledging the representations of numerous highly respected prosecutors as to the utility of electronic eavesdropping, particularly in the investigation of organized crime (id. at 60-62), the Court responded,

“we cannot forgive the requirements of the Fourth Amendment in the name of law enforcement. This is no formality that we require today but a fundamental rule that has long been recognized as basic to the privacy of every home in America. While ‘(t)he requirements of the Fourth Amendment are not inflexible, or obtusely unyielding to the legitimate needs of law enforcement,’ Lopez v. United States, supra, at 464 (dissenting opinion of BRENNAN, J.), it is not asking too much that officers be required to comply with the basic command of the Fourth Amendment before the innermost secrets of one’s home or office are invaded. Few threats to liberty exist which are greater than that posed by the use of eavesdropping devices. Some may claim that without the use of such devices crime detection in certain areas may suffer some delays since eavesdropping is quicker, easier, and more certain. However, techniques and practices may well be developed that will operate just as speedily and certainly and—what is more important—without attending illegality” (id. at 62-63 [emphasis added]).

Responding to Berger’s constitutionally based concerns and holding, Congress in 1968 enacted title III of the Omnibus Crime Control and Safe Streets Act (codified at 18 USC § 2510 et seq.), setting forth baseline standards governing the issuance of eavesdropping warrants (18 USC § 2518) and making those standards applicable to the states (18 USC § 2516 [2]) while permitting them to enact still more restrictive provisions (id.). To the extent, then, that the New York Legislature one year later, in enacting New York’s conforming electronic eavesdropping statute (subsequently codified as CPL article 700) engaged in any balancing of the relevant competing interests, the exercise was largely academic; the essential balancing had already been performed by the Supreme Court and Congress. The State Legislature, as noted, had the option of being more protective of personal privacy than Congress had been, but it retained no power to alter the balance struck at the federal level in the opposite direction. It is suggested that New York’s eavesdropping statute was motivated by some policy to make eavesdropping more readily available in the investigation of organized crime. But the thrust of Berger was in precisely the opposite direction, and, in fact, the ensuing federal enactment, to the extent here relevant, contained no special dispensation for organized crime investigations. Rather, that enactment and its New York analogue, in undoubted recognition of the “inherent dangers” of electronic eavesdropping (see Berger, 388 US at 60, 62) insufficiently appreciated in New York’s former eavesdropping statute, contain what to all appearances are uniformly applicable presumptions against resort to eavesdropping that can be overcome only when the proponent of electronic surveillance proffers “a full and complete statement” of facts establishing either that normal, less intrusive investigative techniques have been tried and have failed, or that they reasonably appear unlikely to succeed in uncovering the sought evidence (18 USC § 2518 [1] [c]; CPL 700.15 [4]; 700.20 [2] [d]). The question now presented is whether the affidavit offered in support of the application for the subject eavesdropping warrant, issued March 31, 2005, met this condition with respect to defendant Rabb.

Permission to tap the cell phone subsequently found to have been used by defendant Rabb was sought after a long pending and then still ongoing investigation of a minority labor coalition known as Akbar’s Community Services (Akbar) and its principals Derrick Walker and Frederick Rasberry, involving witness interviews, document review, visual surveillance, undercover work, search warrant execution and, finally, electronic eavesdropping, disclosed that a cell phone in the name of one Carol Rabb was being used by an individual then identified only as “Divine” to communicate respecting racketeering related activities in which the user was evidently involved. It was thought based on information obtained in the course of the Akbar investigation, most notably phone records and conversations intercepted under eavesdropping warrants pertaining to the cell phones used by Walker and Rasberry, that “Divine” was a leader of P&D Construction Workers (P&D). Although little was actually known about P&D, it appeared that it was a fledgling minority labor coalition in competition with the better established Akbar and that it was to some unascertained extent involved in corrupt practices.

Authorization to eavesdrop on the “Divine” cell phone, used under an account in the name of Carol Rabb, was first sought in March 2005 in the context of an application seeking to extend the previously issued Walker and Rasberry eavesdropping warrants. The applicant’s supporting affidavit, dated March 31, 2005, contains extensive analysis of phone records and lengthy excerpts of conversations intercepted on the Walker and Rasberry cell phones purporting to demonstrate in accordance with the requirements of CPL 700.15 (2) and (3) that there was probable cause to believe that the investigation’s targets were committing specified crimes and that particular communications respecting the suspected crimes would be captured through the sought eavesdropping. The sufficiency of these probable cause allegations is not the issue before us; it is, rather, the adequacy of the immediately following allegations purporting to demonstrate the need for eavesdropping. Those allegations, under the heading “THE NEED FOR EAVESDROPPING,” occupying only 372 of the affidavit’s 64 pages, are notably general and conclusory, and make virtually no attempt to differentiate between the long-standing Akbar investigation and its corporeal targets and the practically nascent investigation into P&D and its supposed leader “Divine.” They are, in fact, barely distinguishable from those comprising “THE NEED FOR EAVESDROPPING” section of the affidavit filed in support of the March 1, 2005 eavesdropping extension application, which targeted only the Walker and Rasberry cell phones; the relevant paragraphs of the March 31, 2005 application differ from those of the March 1 application only in their occasional, unelaborated references to “Divine” or “P&D.”

Apart from noting “a number” of attempts during the preceding month at identifying “Divine” through visual surveillance of meetings between Walker and Rasberry and their associates, the affidavit does not trouble to show in accordance with the first prong of CPL 700.15 (4) that, with respect to P&D and “Divine,” “normal investigative procedures [had] been tried and [had] failed.” The affidavit instead appears to address itself to the statute’s alternative prong under which the requisite showing of need can be premised on a demonstration that “normal investigative procedures . . . reasonably appear to be unlikely to succeed if tried.” In this connection, the affiant alleges as he had previously, almost completely without particular reference, that although physical surveillance might establish “some useful facts” it would be inadequate to achieve the investigation’s goals and might risk the investigation’s secrecy as investigators attempted to draw near to the targets of their scrutiny; that eavesdropping is necessary because the targeted corrupt activities are widespread and involve numerous participants, and because victims of those activities would likely be afraid to testify; that, although the affiant in an undercover capacity had succeeded in transacting illicit business with Rasberry, additional undercover efforts would be impracticable because the members of “this group” had long time associations and family connections precluding the insertion of a government agent; that a grand jury investigation would be futile because witnesses would be afraid to testify and, if they did, would have to be granted immunity; that grand jury subpoenas would tip off the investigation’s targets, foreclosing other conventional avenues of inquiry; and, that the execution of search warrants would be “premature” and would likely result in the destruction of valuable evidence. The relevant portion of the affidavit concludes that evidence necessary for the successful investigation of “this case,” meeting the goals of “this investigation,” can only be obtained through electronic surveillance.

The sought warrant was granted by a Justice of the Appellate Division, Second Department, and thereafter upheld by Supreme Court and the Appellate Division, First Department, over claims by both appellants that the need for eavesdropping on their cell phones had not been made out in accordance with the requirements of CPL 700.15 (4) and 700.20 (2) (d) by the March 31, 2005 warrant applicant. This Court now affirms upon the ground that there is record support for the conclusions of those courts. Supreme Court, however, never found that there had been an individualized showing that ordinary investigative techniques would likely be unavailing with respect to “Divine” and P&D. In denying defendant Rabb’s suppression motion, it found instead that such a showing was unnecessary because the futility of ordinary investigative measures had been shown with respect to Walker and Rasberry, and “Divine” was allegedly engaged in the same type of criminal activity. The Appellate Division affirmed without making any additional factual findings. It refined the rationale of Supreme Court only to the extent of theorizing that “[t]he affiant’s reliance on experience obtained in a closely related investigation into similar activities by other suspects [Walker and Rasberry] was proper, because the affidavit was sufficiently specific in showing the connection between the two investigations” (66 AD3d 487, 488 [2009]). To the extent, then, that this Court now affirms upon the ground that there were findings specific to Rabb and P&D to support the conclusion that normal investigative methods would likely be futile as to them, it acts as a factfinder in excess of its jurisdiction; no court has to this point upheld the challenged warrant upon such grounds.

The reason for this is that the warrant application simply does not state, much less state “fully and completely,” why normal investigative techniques would not likely be useful in obtaining evidence implicating the “Divine” cell phone user and P&D in corrupt labor practices. What it does do is reiterate, practically verbatim, a summary explanation of why normal investigative methods would not be productive with respect to Akbar and its principals—an explanation whose sufficiency did not rest upon the affidavit’s assemblage of generic assertions respecting “THE NEED FOR EAVESDROPPING,” but upon the elsewhere documented 30-month history of the Akbar investigation, in which ordinary investigative methods had been extensively used. There, of course, was no remotely comparable history to recount with respect to the newly commenced investigation of “Divine” and P&D, and in its absence the affidavit’s pat recitation of difficulties endemic to organized crime probes was patently insufficient to explain why ordinary investigative means would likely be fruitless with respect to “Divine” and P&D.

In view of the circumstance that the baseline standard for a showing of necessity in justification of electronic eavesdropping is federal, it is clear that the decisions of the federal courts applying that standard are of special relevance to our inquiry, which, minimally, must be whether there is evidence to permit the inference that the federally compelled standard has been satisfied. The People agree that this is so and list in a decontextualized way numerous bromides to demonstrate that necessity is not a rigorous requirement, but merely one that may be met by a showing that electronic surveillance is not being “routinely employed as the initial step in criminal investigation” (United States v Giordano, 416 US 505, 515 [1974]). We are in this vein reminded that resort to traditional investigative methods need not be exhaustive (see United States v Robledo, 254 Fed Appx 850 [2d Cir 2007]), or entirely useless (see United States v Maxwell, 25 F3d 1389, 1394 [8th Cir 1994]), before a wiretap may be deemed necessary, and that an investigator’s prior experience may have relevance to a judgment that less intrusive investigative techniques would not be efficacious (see United States v Ashley, 876 F2d 1069, 1072 [1st Cir 1989]). It is in addition impressed upon us that the federal cases employ a “common sense approach” in evaluating the government’s assessment of the utility of alternative investigative methods (see United States v Blackmon, 273 F3d 1204, 1207 [2001]). But none of these maxims have actually been applied as the People essentially contend they should be here, effectively to relieve a warrant applicant of the burden of specifying why less intrusive alternatives to eavesdropping would be unavailing in advancing the investigation of a particular target. That electronic surveillance is not the very first step in an investigation is not license for it to be the second or third step; such a literal-minded application of Giordano’s dictum to effectively supplant the statutory requirement was never intended.

It is true that the applicant need not show that alternative methods have actually been tried and have failed, but in lieu of demonstrating necessity by that means, there must, if the necessity requirement is not to be rendered practically nugatory, be some equivalently “full and complete” explanation under the statutory second prong as to why the use of traditional methods would be ineffective to meet reasonably defined investigational objectives. What is required is a factually detailed statement “establishing” (CPL 700.20 [2] [d]) that the evidence sought through a particular wiretap, or its probative equivalent, is not reasonably likely to be acquired through “normal” means. This was never provided as to “Divine” and P&D, and until now was never found to have been. Rather, what was found was that necessity had been shown to justify the Walker and Rasberry wiretaps and that because Akbar and P&D were similar, or because their investigations were connected, the necessity predicate as to the Akbar principals could be transferred to justify the tapping of the cell phones of P&D principals. The legal issue before us is the propriety of that predicate transfer. This is not a mixed question of law and fact, but entirely one of law as to which federal cases have spoken with great clarity.

In United States v Santora (600 F2d 1317 [9th Cir 1979]), the court reviewed eavesdropping warrants issued in connection with an investigation into a numerously populated conspiracy to traffic in stolen airline tickets. Although upholding the electronic surveillance warrants initially issued in the investigation, the court found that the need for certain additional wiretaps subsequently authorized within the same investigation had not been sufficiently made out. It noted that the validity of the prior wiretap authorizations did not entitle the government to “dispense with the required showing when applying to tap the telephones of other conspirators” and quoted United States v Abascal (564 F2d 821, 826 [9th Cir 1977]) for the proposition that “[i]t is not enough that the agents believe the telephone subscribers they wish to tap are all part of one conspiracy Less intrusive investigative procedures may succeed with one putative participant while they may not succeed with another” (600 F2d at 1321). Similarly, in United States v Gonzalez, Inc. (412 F3d 1102 [9th Cir 2005]), the validity of prior eavesdropping warrants issued in connection with an investigation into an immigration smuggling ring, permitting the tapping of certain phones at a bus terminal, was held insufficient to demonstrate the necessity of subsequent wiretaps placed on phones at a different location:

“[the government] attempted to shoe-horn the significant investigatory work the government conducted before applying for the Terminal wiretap into its application for the Blake Avenue wiretap. But the government is not free to transfer a statutory showing of necessity from one application to another—even within the same investigation. This court has held that an issuing judge may not examine various wiretap applications together when deciding whether a new application meets the statutory necessity requirement. Each wiretap application must separately satisfy the necessity requirement” (id. at 1115 [emphasis added]).

Here, while we deal with what in the investigator’s eyes was one investigation into the corrupt practices of minority labor coalitions, the investigation, objectively, had numerous distinct targets. P&D and Akbar were separate, indeed by the People’s description, rival, entities. While they may have shared similar goals for their respective memberships and leaders, and there was some evidence that they occasionally colluded, there was no basis to suppose that they were part of a single overarching criminal conspiracy or enterprise. Moreover, even if there had been, it is clear from Santora and Gonzalez that the showing of necessity made in justification of the Akbar wiretaps was not transferrable to support the P&D wiretaps. Indeed, the showing of necessity made with respect to Walker and Rasberry would not even have been transferrable to justify eavesdropping on the phones of other Akbar principals.

That normal means had, after extensive and often useful application, reached a point of diminishing returns in the Akbar investigation, did not “establish” that such means were unlikely to be productive in the relatively recently commenced investigation of P&D and its principals. If the two entities were comparable as the People contend, the early success of the Akbar investigation using ordinary means of inquiry, would seem to suggest that such means would have been similarly efficacious in the early stages of the P&D investigation. If, on the other hand, the entities were, as defendants contend, quite different, there would appear to be no ground to suppose that the experience in investigating Akbar had much predictive value in assessing the utility of “normal” techniques in the investigation of P&D. It is, in any case, not consistent with the constitutionally grounded statutory presumption against electronic eavesdropping that there should be a proliferation of wiretaps based upon necessity findings turning on the mere relatedness or similarity of investigations or their targets. If that were permitted, wiretapping would, in a broad range of situations defying judicial containment, routinely become among the first investigative means employed, rather than a necessary supplement to ordinary, less intrusive measures.

It does not seem to me wise to avoid this squarely presented problem, and particularly to do so by denominating the legal issue before us as a “mixed question.” Today’s decision, while perhaps narrowly intended, will, given its factual underpinning, be taken as granting broad permission to dispense with the necessity requirement in a wide range of circumstances based simply upon the supposed similarity of targets or the connectedness of investigations. These theories undeniably have their attraction; it may well seem a foregone conclusion borne out by an investigator’s experience in probing other apparently similar criminal enterprises that the entity with which he or she is now confronted will not be amenable to penetration by ordinary means and that the investigation’s ultimate objective—the complete extirpation of the criminal organism’s many roots and tendrils—will not be achievable except with the aid of electronic surveillance. But it is in this context a court’s obligation under the law to check the impulse toward the expedient use of wiretaps and remind those in the often competitive business of ferreting out crime that the

“fact ‘that traditional investigation methods do not reveal all [is a] generic problem[ ] of police investigation [and that its] generic nature does not dissipate simply because the government claims a vast investigative purpose . . . The government may not cast its investigative net so far and wide as to manufacture necessity in all circumstances’ ” (United States v Gonzalez, Inc., 412 F3d at 1114-1115, quoting United States v Blackmon, 273 F3d at 1211).

Because I believe that the tack now taken by this Court affords government a net far more capacious than the law permits, either in its federal or conforming state iteration, I would reverse, grant the motions for suppression of communications obtained by means of the wiretaps authorized in reliance upon the March 31, 2005 warrant, and remit the matters for further proceedings.

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

In each case: Order affirmed.

      . Such coalitions originated in the 1960s as a legitimate means of assisting minority workers to obtain work in the construction industry.

      . Rabb has not contested that he went by the name of “Divine” and, unless otherwise noted, he will be referred to by his real name.

      . The application stated that, during the 30-month investigation into Akbar’s activities, physical surveillance had been ineffective in discerning the true nature of the relationships Walker and Rasberry had with the contractors, that a grand jury investigation would be futile since the witnesses were either participants in the crimes (who would receive full transactional immunity) or coalition victims wary of retaliation, and that the use of search warrants would be of little help in assisting law enforcement in determining Walker’s supervisory role in directing coalition members to violate the law.

      . It is defendants’ position that, should the March 31, 2005 application fall, so too should the subsequent applications.

      . The presumption may also be overcome by a showing that “normal” investigation would be too dangerous, but that ground is not here raised.

      . In the course of the electronic surveillance conducted pursuant to the March 31, 2005 warrant’s authority investigators became aware of the cell phone whose use was eventually traced to defendant Mason. Permission to eavesdrop on the Mason phone was sought in subsequent warrant applications. Inasmuch, however, as those subsequent warrants were premised upon information obtained pursuant to the March 2005 warrant authorizing the tap of the “Divine” cell phone, the crucial predicate for the disposition of each appellant’s suppression motion was that set forth in the supporting March 31, 2005 affidavit.

      . The validity of these warrants is not here at issue.

      . The majority takes considerable liberty when it attributes to the People at the time of the warrant application knowledge of “how P&D operated its business” (majority op at 154). Virtually nothing was known about P&D’s structure or operations at that time.

      . While the majority finds relevant the additional circumstance that a “Divine” business card had, during the Akbar investigation, been obtained from a contractor who claimed that it had been left with her by a P&D agent who demanded that community workers be employed at her work site, the affiant apparently did not deem this transaction pertinent to his explanation of the need for eavesdropping. This is understandable since the receipt of the business card and its ensuing use in identifying P&D as an investigative target in no way showed that eavesdropping was necessary.

      . Supreme Court stated:
      “The People did not have to conduct a preliminary investigation of defendant as a prerequisite to establishing that normal investigative procedures could not be utilized to investigate defendant’s alleged criminal conduct. The People had already shown that such measures had been tried and failed or that they reasonably appeared to be unlikely to succeed if employed against Walker and [Rasberry], Defendant allegedly engaged in the same type of criminal enterprise and criminal activity as that allegedly engaged in by defendants Walker and [Rasberry], Under those circumstances, the People were not required to make a more individualized showing that such measures would be unlikely to succeed against defendant or that such measures had been attempted and failed.”

      . This is clear when the quotation is read in context:
      “Congress legislated in considerable detail in providing for applications and orders authorizing wiretapping and evinced the clear intent to make doubly sure that the statutory authority be used with restraint and only where the circumstances warrant the surreptitious interception of wire and oral communications. These procedures were not to be routinely employed as the initial step in criminal investigation. Rather, the applicant must state and the court must find that normal investigative procedures have been tried and failed or reasonably appear to be unlikely to succeed if tried or to be too dangerous” (416 US at 515 [emphasis added]).


author: Smith, J.

text:
    [944 NE2d 1120, 919 NYS2d 481]
    The People of the State of New York, by Andrew M. Cuomo, Attorney General of the State of New York, Appellant, v Wells Fargo Insurance Services, Inc., et al., Respondents.
    Argued January 5, 2011;
    decided February 17, 2011

      POINTS OF COUNSEL

      Andrew M. Cuomo, Attorney General, New York City (Richard Bearing, Barbara D. Underwood and Steven Wu of counsel), for appellant.
    I. The complaint states a claim for breach of the fiduciary duty of loyalty. (Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300; People v Coventry First LLC, 13 NY3d 108; Fils-Aime v Ryder TRS, Inc., 40 AD3d 917; Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 7 NY3d 152; NWE Corp. v Atomic Risk Mgt. of N.Y., Inc., 25 AD3d 349; Clinchy v Grandview Dairy, Inc., 283 NY 39; Lusenskas v Axelrod, 81 NY2d 300; Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436; Precision Auto Accessories, Inc. v Utica First Ins. Co., 52 AD3d 1198; Rendeiro v State-Wide Ins. Co., 8 AD3d 253.) II. The complaint states a claim under Executive Law § 63 (12). (State of New York v Rachmani Corp., 71 NY2d 718; People v Federated Radio Corp., 244 NY 33; Guggenheimer v Ginzburg, 43 NY2d 268; Matter of Lefkowitz v Bull Inv. Group, 46 AD2d 25; People v General Elec. Co., 302 AD2d 314; People v Concert Connection, 211 AD2d 310; State of New York v Sonifer Realty Corp., 212 AD2d 366; People v Coventry First LLC, 52 AD3d 345, 13 NY3d 108; Joannou v Blue Ridge Ins. Co., 289 AD2d 531; Petitt v Celebrity Cruises, Inc., 153 F Supp 2d 240.)

      Alan L. Kildow, of the Minnesota bar, admitted pro hac vice, Skadden, Arps, Slate, Meagher & Flom, LLP, Washington, D.C. (Richard L. Brusca and Amanda M. Raines of counsel), and Skadden, Arps, Slate, Meagher & Flom, LLP, New York City (Steven R. Glaser of counsel), for respondents.
    I. The Appellate Division properly affirmed dismissal of the breach of fiduciary duty claim. (Murphy v Kuhn, 90 NY2d 266; Hersch v DeWitt Stern Group, Inc., 43 AD3d 644; Wender v Gilberg Agency, 304 AD2d 311, 100 NY2d 507; Verbert v Garcia, 63 AD3d 1149; Bruckmann, Rosser, Sherrill & Co., L.P. v Marsh USA, Inc., 65 AD3d 865; Kimmell v Schaefer, 89 NY2d 257; People v Liberty

      Mut. Ins. Co., 52 AD3d 378; GlobalNet Financial.com, Inc. v Frank Crystal & Co., Inc., 449 F3d 377; Busker on Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376; Hoffend & Sons, Inc. v Rose & Kiernan, Inc., 19 AD3d 1056, 7 NY3d 152.) II. The Appellate Division properly affirmed dismissal of the complaint for failure to state a claim under Executive Law § 63 (12). (People v Condor Pontiac, Cadillac, Buick & GMC Trucks, Inc., 2003 NY Slip Op 51082[U]; Matter of State of New York v Magley, 105 AD2d 208; People v 21st Century Leisure Spa Intl., 153 Misc 2d 938; State of New York v Cortelle Corp., 38 NY2d 83; People v H&R Block, Inc., 16 Misc 3d 1124[A], 2007 NY Slip Op 51562[U]; People v Katz, 84 AD2d 381; Browning Ave. Realty Corp. v Rubin, 207 AD2d 263; People v Lipsitz, 174 Misc 2d 571; State of New York v Feldman, 210 F Supp 2d 294; People v Apple Health & Sports Clubs, 206 AD2d 266.)

      Vinson & Elkins L.L.P., New York City (Steven Paradise of counsel), for Liberty Mutual Insurance Company and others, amici curiae.
    I. The Attorney General’s agency theory is inapplicable in an insurance context. (Hersch v DeWitt Stern Group, Inc., 43 AD3d 644; People v Liberty Mut. Ins. Co., 52 AD3d 378; Murphy v Kuhn, 90 NY2d 266; Bohlinger v Zanger, 306 NY 228; Guardian Life Ins. Co. of Am. v Chemical Bank, 94 NY2d 418; Aeropulse, Inc. v Armstrong & Brooks, Ltd., 740 F Supp 938; Core-Mark Intl. v Swett & Crawford Inc., 71 AD3d 1072; Kimmell v Schaefer, 89 NY2d 257; People v Coventry First LLC, 13 NY3d 108, 13 NY3d 758; Rudolph E. Bucci, Inc. v Greater N.Y. Mut. Ins. Co., 69 Misc 2d 465.) II. Making a broker a fiduciary with respect to the insured it serves would open a Pandora’s box that this Court warned against. (People v Liberty Mut. Ins. Co., 52 AD3d 378; Hersch v DeWitt Stern Group, Inc., 43 AD3d 644; Meinhard v Salmon, 249 NY 458; Murphy v Kuhn, 90 NY2d 266.)

      Steptoe & Johnson LLP, New York City (Sandra E. Cavazos of counsel), and Steptoe & Johnson LLP, Washington, D.C. (Scott A. Sinder of counsel), for Council of Insurance Agents and Brokers, amicus curiae.
    I. The disclosure obligation that the Attorney General seeks to impose violates the well-established statutory canon of construction expressio unius est exclusio alterius. (Aeropulse, Inc. v Armstrong & Brooks, Ltd., 740 F Supp 938; Pajak v Pajak, 56 NY2d 394; National Railroad Passenger Corporation v National Assn. of Railroad Passengers, 414 US 453; Botany Worsted Mills v United States, 278 US 282; Barnhart v Peabody Coal Co., 537 US 149; United States v Vonn, 535 US 55; Chevron US A. Inc. v Echazabal, 536 US 73.) II. The recently-enacted regulation governing disclosure of producer compensation makes it unnecessary for this Court to reach the fiduciary duty issue. (People v Coventry First LLC, 13 NY3d 108.)
   OPINION OF THE COURT

Smith, J.

We hold that an insurance broker does not have a common-law fiduciary duty to disclose to its customers “incentive” arrangements that the broker has entered into with insurance companies.

I

The Attorney General brought this action against a large insurance brokerage firm now known as Wells Fargo Insurance Services, Inc. The complaint contains four causes of action, alleging that Wells Fargo engaged in “repeated fraudulent or illegal acts” in violation of Executive Law § 63 (12), was unjustly enriched, committed common-law fraud and breached its fiduciary duties.

The complaint alleges the following facts: Insurance brokers, including Wells Fargo, act as agents for organizations and individuals seeking to purchase insurance. Wells Fargo deals with insurance companies on those customers’ behalf, obtains quotes from the insurers, and presents them to the customers; and it also offers the customers recommendations about what coverage will best suit their needs. Wells Fargo “often has advised its customers in complex insurance placements where all things are rarely equal, and where subjective decisions must be made among competitors with varying coverages, financial stability, and price.” Customers rely on Wells Fargo “to make its recommendations strictly based on the customer’s best interest.”

The complaint also alleges that Wells Fargo entered into a number of “incentive” arrangements with insurance companies, in which the insurance companies rewarded Wells Fargo for bringing them business. The complaint focuses especially on Wells Fargo’s “Millennium Partners Program,” in which participating insurers agreed to pay cash compensation to Wells Fargo based on the volume of business that the broker brought to them. It alleges that, as a result of the incentive programs, Wells Fargo “steered” its customers to particular insurance companies and away from others that did not participate in the programs.

The complaint alleges that the incentive payments were not disclosed to Wells Fargo’s customers. It does not allege, however, that Wells Fargo made any affirmative misrepresentations or that any customer suffered demonstrable harm from the incentive arrangements. There is no allegation that any customer was persuaded to buy inferior, or overpriced, insurance in order to help Wells Fargo earn its incentives.

Supreme Court dismissed the complaint with leave to replead (18 Misc 3d 1117[A], 2008 NY Slip Op 50114[U]). The Attorney General chose not to replead, but appealed to the Appellate Division, which affirmed the dismissal (People v Wells Fargo Ins. Servs., Inc., 62 AD3d 404 [2009]). We granted leave to appeal (13 NY3d 717 [2010]), and now affirm.

II

Though the complaint relies on various legal theories, they can all be boiled down to a claim for breach of fiduciary duty. In the absence of an allegation that Wells Fargo misrepresented any fact to its customers, or that it did anything to cause actual injury to the customers’ interests, the case rests on the rule that one acting as a fiduciary in a particular transaction may not receive, in connection with that transaction, undisclosed compensation from persons with whom the principal’s interests may be in conflict (see generally EBC I, Inc. v Goldman, Sachs & Co., 5 NY3d 11, 19-22 [2005]). The rule is a sound one in general, but we conclude that it does not apply here.

Wells Fargo, relying on Murphy v Kuhn (90 NY2d 266 [1997]), asserts that we have already decided the fiduciary duty issue in its favor. We said in Murphy:

“Generally, the law is reasonably settled on initial principles that insurance agents have a common-law duty to obtain requested coverage for their clients within a reasonable time or inform the client of the inability to do so; however, they have no continuing duty to advise, guide or direct a client to obtain additional coverage” (id. at 270).

We agree with the Attorney General that Wells Fargo reads Murphy too broadly. Murphy did not imply that insurance brokers are exempt from the general rule that an agent owes a duty of loyalty to its principal. Even if it had no duty to give advice, Wells Fargo clearly could not give advice in bad faith—it could not, for example, advise a customer to buy coverage that Wells Fargo knew to be inferior, in exchange for an under-the-table payment to Wells Fargo from the insurer. But this complaint does not allege that Wells Fargo did anything of that kind. Indeed, the complaint alleges nothing that breached Wells Fargo’s duty of loyalty, unless it was a breach of that duty to enter into undisclosed incentive arrangements with insurance companies.

In arguing that it was, the Attorney General relies on three propositions: that an insurance broker is the agent of the insured (see Security Mut. Ins. Co. of N.Y. v Acker-Fitzsimons Corp., 31 NY2d 436, 442 n 3 [1972]); that a principal-agent relationship is, by nature, a fiduciary relationship (see Sokoloff v Harriman Estates Dev. Corp., 96 NY2d 409, 416 [2001]; Restatement [Third] of Agency § 1.01); and that a fiduciary must disclose to its principal any interest in a particular transaction that causes the fiduciary’s loyalties to be divided (Dubbs v Stribling & Assoc., 96 NY2d 337, 340-341 [2001]). There is truth in all these propositions, but the relationship between an insurance broker and a purchaser of insurance is not as simple as the Attorney General suggests. A broker is the agent of the insured, but it customarily looks for compensation to the insurer, not the insured, and it is sometimes the insurer’s agent also—for example, when collecting premiums. We have thus referred to the broker’s “dual agency status” (Bohlinger v Zanger, 306 NY 228, 230 [1954]). Indeed, the word “broker” suggests an intermediary—not someone with undivided loyalty to one or the other side of the transaction.

Recognizing the complexity of an insurance broker’s role, several Appellate Division cases hold that such a broker need not disclose to its customers contractual arrangements it has made with insurance companies (People v Liberty Mut. Ins. Co., 52 AD3d 378 [1st Dept 2008]; Hersch v DeWitt Stern Group, Inc., 43 AD3d 644, 645 [1st Dept 2007]; Wender v Gilberg Agency, 304 AD2d 311 [1st Dept 2003]). We agree that such disclosure is not normally required—and if there are exceptions to that rule, this case does not present one. The complaint does not allege that anything Wells Fargo did was contrary to industry custom; indeed, the parties seem to agree that arrangements like those the Attorney General complains of have been commonplace, and have not generally been disclosed.

This nondisclosure may be a bad practice. Indeed, it is prohibited by a recently adopted regulation of the Insurance Department, but that regulation did not exist at the time of the conduct at issue here (see 11 NYCRR 30.3 [a] [2] [eff Jan. 1, 2011] [requiring disclosure to a purchaser of insurance if a broker “will receive compensation from the selling insurer . . . based in whole or in part on the insurance contract” that the broker sells]). A regulation, prospective in effect, is a much better way of ending a questionable but common practice than what the Attorney General asks us to do here: in substance to outlaw the practice retroactively by creating a new common-law rule.

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

Chief Judge Lippman and Judges Ciparick, Read, Pigott and Jones concur; Judge Graffeo taking no part.

Order affirmed, with costs.


author: Jones, J.

text:
    [944 NE2d 1104, 919 NYS2d 465]
    Mandarin Trading Ltd., Appellant, v Guy Wildenstein et al., Respondents.
    Argued January 5, 2011;
    decided February 10, 2011

      POINTS OF COUNSEL

      Crowell & Moring LLP, New York City (Clifton S. Elgarten, Samaa Haridi, Birgit Kurtz and Daniel Ginzburg of counsel), for appellant.
    I. The courts below addressed the claims in a manner inconsistent with the basic facts set forth in the complaint. (Leon v Martinez, 84 NY2d 83; Faggionato v Lerner, 500 F Supp 2d 237; Eurycleia Partners, LP v Seward & Kissel, LLP, 12 NY3d 553; Ossining Union Free School Dist. v Anderson LaRocca Anderson, 73 NY2d 417; Buxton Mfg. Co. v Valiant Moving & Stor., 239 AD2d 452; Credit Alliance Corp. v Arthur Andersen & Co., 65 NY2d 536; Prudential Ins. Co. of Am. v Dewey, Ballantine, Bushby, Palmer & Wood, 80 NY2d 377.) II. Each of the counts of the complaint has been properly pleaded. (Tindle v Birkett, 171 NY 520; Eaton Cole & Burnham Co. v Avery, 83 NY 31; Kimmell v Schaefer, 89 NY2d 257; State of Cal. Pub. Employees’ Retirement Sys. v Shearman & Sterling, 95 NY2d 427; Anesthesia Assoc. of Mount Kisco, LLP v Northern Westchester Hosp. Ctr., 59 AD3d 473; State of New York v Daicel Chem. Indus., Ltd., 42 AD3d 301; Simonds v Simonds, 45 NY2d 233; Banque Worms v BankAmerica Intl., 77 NY2d 362; National Bank of Commerce in N.Y. v National Mechanics’ Banking Assn. of N.Y., 55 NY 211.) III. That an appraisal is an “opinion” does not vitiate liability for either intentional or negligent wrongdoing. (Rodin Props.-Shore Mall v Ullman, 264 AD2d 367; Jacobs v Lewis, 261 AD2d 127; DH Cattle Holdings Co. v Smith, 195 AD2d 202; Spitzer v Christie’s Appraisals, 235 AD2d 266; Cristallina v Christie, Manson & Woods Intl., 117 AD2d 284.)

      Schindler Cohen & Hochman LLP, New York City (Steven R. Schindler and Daniel E. Shaw of counsel), for respondents.
    I. The Appellate Division did not err in affirming the dismissal of Mandarin Trading Ltd.’s claims for fraudulent misrepresentation and concealment. (Lama Holding Co. v Smith Barney, 88 NY2d 413; Cohen v Houseconnect Realty Corp., 289 AD2d 277; Godfrey v Spano, 13 NY3d 358; SNS Bank v Citibank, 7 AD3d 352; Zanett Lombardier, Ltd. v Maslow, 29 AD3d 495; Tindle v

      Birkett, 171 NY 520; Eaton Cole & Burnham Co. v Avery, 83 NY 31; Buxton Mfg. Co. v Valiant Moving & Stor., 239 AD2d 452; Ravenna v Christie’s Inc., 289 AD2d 15; Rodin Props.-Shore Mall v Ullman, 264 AD2d 367.) II. The Appellate Division did not err in holding that Guy Wildenstein’s July 28, 2000 letter was a nonactionable opinion. (Jacobs v Lewis, 261 AD2d 127; Chase Invs. v Kent, 256 AD2d 298; Greenberg v Chrust, 282 F Supp 2d 112; Cristallina v Christie, Manson & Woods Intl., 117 AD2d 284; Struna v Wolf, 126 Misc 2d 1031; Spitzer v Christie’s Appraisals, 235 AD2d 266.) III. The Appellate Division did not err in affirming the dismissal of Mandarin Trading Ltd.’s negligent misrepresentation claims. (Parrott v Coopers & Lybrand, 95 NY2d 479; Ravenna v Christie’s Inc., 289 AD2d 15; Kimmell v Schaefer, 89 NY2d 257; Credit Alliance Corp. v Arthur Andersen & Co., 65 NY2d 536.) IV The Appellate Division did not err in affirming the dismissal of Mandarin Trading Ltd.’s contract claims. (767 Third Ave. LLC v Greble & Finger, LLP, 8 AD3d 75; American-European Art Assoc. v Trend Galleries, 227 AD2d 170; Matter of Sud v Sud, 211 AD2d 423; Mendel v Henry Phipps Plaza W., Inc., 6 NY3d 783.) V The Appellate Division did not err in affirming the dismissal of Mandarin Trading Ltd.’s unjust enrichment claim. (Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415; Banque Worms v BankAmerica Intl., 77 NY2d 362.)
   OPINION OF THE COURT

Jones, J.

In a dispute arising from the purchase and sale of the painting Paysage aux Trois Arbres by Paul Gauguin, this Court is asked to determine whether claims sounding in fraud, negligent misrepresentation, breach of contract, and unjust enrichment were properly pleaded in the plaintiff’s complaint.

In July 2000, J. Amir Cohen approached plaintiff Mandarin Trading Ltd. to solicit interest in the purchase of the painting for investment purposes. Cohen explained that he could arrange a transaction for the sale and subsequent resale of the painting at an auction. Mandarin was interested in the opportunity, but sought (1) an appraisal of the painting, (2) a report of its condition, and (3) a report of its prior ownership. Cohen agreed to obtain the requested information and recommended defendant Guy Wildenstein, an allegedly renowned expert on Gauguin, for the appraisal.

On July 28, 2000, Wildenstein presented a written appraisal letter to Michel Reymondin, which stated that the painting was worth $15 million to $17 million. Neither Reymondin’s role in the transactions, nor his relationship to the parties is pleaded. Furthermore, the letter is addressed solely to Reymondin and neither indicates the purpose of the letter nor who requested the valuation of the painting. While the letter revealed that the painting was part of Mrs. Arthur Lehman’s collection and was once sold by Wildenstein, it did not disclose any contemporaneous ownership interest. Mandarin received the letter, the complaint does not say from whom, on August 12, 2000.

On August 9, 2000, Cohen contacted and informed Mandarin that if the painting was purchased expeditiously, it could be sold at auction through Christie’s at an optimum price. Christie’s had outlined the logistics of the auction in a letter to Cohen in which Christie’s proposed to hold an auction for the painting in New York with a reserve price of $12 million—a price below which the painting would not sell. Christie’s estimated that the painting could sell for $12 million to $16 million.

Mandarin purchased the painting through a series of transactions that occurred during the period of August 16, 2000 to August 30, 2000. First, Peintures Hermes S.A., a company allegedly owned by Wildenstein, forwarded an invoice to Calypso Fine Art Ltd., an intermediary, for the sale transaction. Mandarin then wired $11.3 million for the purchase of the painting to Calypso’s account. Finally, Calypso paid $9.5 million to Peintures in exchange for the painting and then transferred the painting to Mandarin. It is further alleged that Peintures deposited $8.8 million into a bank account owned by Wildenstein.

On November 8, 2000, Christie’s held an auction for the painting, but the highest bid failed to exceed the reserve price and the painting was not sold. Mandarin has since retained ownership of the painting.

Before discovery, Supreme Court granted Wildenstein’s CPLR 3211 (a) (1) and (7) motion to dismiss Mandarin’s complaint (17 Misc 3d 1118[A], 2007 NY Slip Op 52059[U]). Supreme Court held that Mandarin’s fraud claims failed because the complaint did not allege that Wildenstein intended to defraud Mandarin through a misstatement of fact upon which Mandarin could justifiably rely. The negligent misrepresentation claim was dismissed for lack of a special relationship, privity, or a privitylike relationship between the parties. In addition, the breach of contract claims were dismissed for failure to plead the existence of a contract. Finally, the unjust enrichment claim was dismissed because Supreme Court concluded that Mandarin unjustifiably relied upon the appraisal.

In a 3-2 decision, the Appellate Division affirmed dismissal of Mandarin’s complaint by holding that the pleadings did not sufficiently allege claims for fraud, negligent misrepresentation, breach of contract, and unjust enrichment (65 AD3d 448 [1st Dept 2009]). One dissenting Justice voted to affirm dismissal of the claims at law, but to reinstate the equity claim of unjust enrichment, while the other dissenting Justice sought to reinstate Mandarin’s entire complaint. Mandarin appeals to this Court as of right, from the two-Justice dissent, pursuant to CPLR 5601 (a).

In the context of a CPLR 3211 motion to dismiss, the pleadings are “to be afforded a liberal construction. [The Court must] accept the facts as alleged in the complaint as true, [and] accord plaintiffs the benefit of every possible favorable inference” (Leon v Martinez, 84 NY2d 83, 87 [1994] [citation omitted]; see also Morone v Morone, 50 NY2d 481, 484 [1980]). Even affording Mandarin all favorable inferences, the complaint fails to sufficiently plead its claims, and we now affirm.

Fraud

Generally, in a claim for fraudulent misrepresentation, a plaintiff must allege “a misrepresentation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission, and injury” (Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; see also Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403, 406-407 [1958]). Furthermore, where a cause of action is based in fraud, “the circumstances constituting the wrong shall be stated in detail” (see CPLR 3016 [b]; see also Lanzi v Brooks, 43 NY2d 778, 780 [1977] [“(CPLR 3016 [b]) requires only that the misconduct complained of be set forth in sufficient detail to clearly inform a defendant with respect to the incidents complained of’]).

Mandarin argues that the complaint properly pleads that Wildenstein’s omission of his ownership interest in the painting when providing the appraisal was a fraudulent, material misrepresentation intended to induce Mandarin’s reliance. Wildenstein asserts that the complaint fails to plead that Wildenstein specifically intended to defraud Mandarin, and also owed a fiduciary duty to disclose an alleged ownership interest.

Wildenstein’s letter regarding the painting’s value constituted nonactionable opinion that provided no basis for a fraud claim (see Jacobs v Lewis, 261 AD2d 127, 127-128 [1st Dept 1999] [“alleged misrepresentations amounted to no more than opinions and puffery or ultimately unfulfilled promises, and in either case were not actionable as fraud”]). The letter merely disclosed Wildenstein’s familiarity with the painting, a belief that the painting was worth $15 million to $17 million, and an acknowledgement that the letter was addressed in response to Reymondin, with no mention of Mandarin.

Furthermore, with respect to a claim of fraudulent omission, the complaint fails to allege that Wildenstein owed a fiduciary duty to Mandarin (see P.T. Bank Cent. Asia, N.Y. Branch v ABN AMRO Bank N.V., 301 AD2d 373, 376 [1st Dept 2003] [“A cause of action for fraudulent concealment requires, in addition to the four foregoing elements (of fraudulent misrepresentation), an allegation that the defendant had a duty to disclose material information and that it failed to do so”]).

The narrative within the complaint is devoid of facts indicating any connection between Mandarin and Wildenstein that would give rise to a fiduciary duty. Highlighting this deficiency are pleadings that require leaps of fact and logic such as the unknown role played by Reymondin—the man who allegedly received the appraisal from Wildenstein. By failing to plead the role played by Reymondin or how he was related to the parties, no inference can be drawn, for example, that Wildenstein misrepresented his alleged ownership interest or the painting’s value, knowing that Reymondin would transfer the information to Mandarin. Moreover, the letter offers no assistance to Mandarin’s claim, in light of the fact that the letter was addressed solely to Reymondin, and in the absence of allegations creating a bridge between Mandarin and Wildenstein. Rather than alleging that Wildenstein misrepresented his ownership to Mandarin specifically, an insufficient, general allegation is proffered that Wildenstein was required to disclose his interest because he should have known that a hypothetical purchaser would rely on the appraisal letter (see Garelick v Carmel, 141 AD2d 501, 502 [2d Dept 1988] [“Moreover, in order to plead a valid cause of action sounding in fraud, the complaint must set forth all of the elements of fraud including the making of material representations by the defendant to the plaintiff’]).

As such, Mandarin’s fraud claims were properly dismissed.

Negligent Misrepresentation

It is well settled that “[a] claim for negligent misrepresentation requires the plaintiff to demonstrate (1) the existence of a special or privity-like relationship imposing a duty on the defendant to impart correct information to the plaintiff; (2) that the information was incorrect; and (3) reasonable reliance on the information” (J.A.O. Acquisition Corp. v Stavitsky, 8 NY3d 144, 148 [2007]; see also Parrott v Coopers & Lybrand, 95 NY2d 479, 483-484 [2000]).

Mandarin argues that the Appellate Division majority erred in affirming dismissal of this claim because, here, a buyer-seller relationship established privity. Wildenstein responds that no relationship existed between the parties.

A special relationship may be established by “persons who possess unique or specialized expertise, or who are in a special position of confidence and trust with the injured party such that reliance on the negligent misrepresentation is justified” (Kimmell v Schaefer, 89 NY2d 257, 263 [1996]). Although Mandarin generally pleads that “a special relationship of trust or confidence” existed between the parties, the lack of allegations showing a relationship with Wildenstein mandates dismissal of this claim. The complaint does not allege whether Wildenstein had any contact with Mandarin, whether Mandarin solicited the appraisal directly from Wildenstein, whether Wildenstein knew the purpose of the appraisal letter, or whether Wildenstein was even aware of Mandarin’s existence.

In Kimmell, the defendant sought to induce plaintiffs to invest in a business venture by directly sending them a memo regarding business projections, meeting with them personally, and sending out correspondence to assure the safety of the investment. We held that the record supported a finding that the defendant established a special relationship with the plaintiffs because of the financial skill and expertise of the defendant, and his continued attempts to communicate directly with the plaintiffs to induce their investment (id. at 264).

Ravenna v Christie’s Inc. (289 AD2d 15 [2001]) involved a similar issue in the context of the sale of a painting where the plaintiff alleged negligent misrepresentation after meeting with a Christie’s representative and receiving advice on the value of a painting. The Appellate Division held that gratuitous advice given in a single meeting, “which did not even create a business relationship, cannot be said to have created a relationship of trust and confidence” (id. at 16).

Here, the pleadings fail to allege the existence of any relationship between Mandarin and Wildenstein that would support a negligent misrepresentation claim. Unlike the defendant in Kimmell, there are no allegations here that Wildenstein ever met with Mandarin, was retained by Mandarin for an appraisal, or knew that the appraisal would be used by Mandarin for the purpose of purchasing the painting (see Spitzer v Christie’s Appraisals, 235 AD2d 266 [1st Dept 1997]). And this case has an even more tenuous basis for finding privity, or a privity-like relationship, as it lacks even the bare, minimal contact of the parties in Ravenna. Wildenstein’s art expertise alone cannot create a special relationship where otherwise the relationship between the parties is too attenuated.

Mandarin further argues that Wildenstein should have known or foreseen that the appraisal was requested by a purchaser for the purpose of buying the painting, but this Court has

“previously rejected a rule ‘permitting recovery by any “foreseeable” plaintiff who relied on the negligently prepared report, and have rejected even a somewhat narrower rule that would permit recovery where the reliant party or class of parties was actually known or foreseen’ but the individual defendant’s conduct did not link it to that third party” (Parrott, 95 NY2d at 485).

Accordingly, without further allegations establishing a relationship between the parties, Mandarin’s complaint fails and was properly dismissed.

Breach of Contract

Mandarin alleges that it has sufficiently pleaded a breach of contract claim because it was an intended third-party beneficiary to an appraisal contract between Wildenstein and Reymondin. However, the failure to allege a relationship between the parties again proves fatal to this claim as well.

Generally, a party alleging a breach of contract must “demonstrate the existence of a . . . contract reflecting the terms and conditions of their . . . purported agreement” (American-European Art Assoc. v Trend Galleries, 227 AD2d 170, 171 [1st Dept 1996]). In the context of a third-party beneficiary claim, the plaintiff must establish:

“(1) the existence of a valid and binding contract between other parties, (2) that the contract was intended for [its] benefit, and (3) that the benefit to [it] is sufficiently immediate ... to indicate the assumption by the contracting parties of a duty to compensate [it] if the benefit is lost” (Mendel v Henry Phipps Plaza W., Inc., 6 NY3d 783, 786 [2006]).

The complaint only offers conclusory allegations without pleading the pertinent terms of the purported agreement. We are left to speculate as to the parties involved and the conditions under which this alleged appraisal contract was formed. Consequently, by failing to plead the salient terms of a valid and binding contract, Mandarin cannot show that the contract was intended for its immediate benefit.

Unjust Enrichment

“The essential inquiry in any action for unjust enrichment ... is whether it is against equity and good conscience to permit the defendant to retain what is sought to be recovered” CParamount Film Distrib. Corp. v State of New York, 30 NY2d 415, 421 [1972]). A plaintiff must show “that (1) the other party was enriched, (2) at that party’s expense, and (3) that ‘it is against equity and good conscience to permit [the other party] to retain what is sought to be recovered’ ” (Citibank, N.A. v Walker, 12 AD3d 480, 481 [2d Dept 2004]; Baron v Pfizer, Inc., 42 AD3d 627, 629-630 [3d Dept 2007]).

Mandarin’s unjust enrichment claim fails for the same deficiency as its other claims—the lack of allegations that would indicate a relationship between the parties, or at least an awareness by Wildenstein of Mandarin’s existence. Although privity is not required for an unjust enrichment claim, a claim will not be supported if the connection between the parties is too attenuated (see Sperry v Crompton Corp., 8 NY3d 204, 215 [2007]).

Moreover, under the facts alleged, there are no indicia of an enrichment that was unjust where the pleadings failed to indicate a relationship between the parties that could have caused reliance or inducement. Without further allegations, the mere existence of a letter that happens to find a path to a prospective purchaser does not render this transaction one of equitable injustice requiring a remedy to balance a wrong. Without sufficient facts, conclusory allegations that fail to establish that a defendant was unjustly enriched at the expense of a plaintiff warrant dismissal (see North Salem Psychiatric Servs., P.C. v Medco Health Solutions, Inc., 50 AD3d 986 [2d Dept 2008]; Vassel v Vassel, 40 AD2d 713 [2d Dept 1972], affd 33 NY2d 533 [1973]).

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

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

Order affirmed, with costs.

       Phoenix Capital Reserve Fund is the parent corporation of Mandarin. Phoenix Capital’s director, Patrick Blum, was approached by Cohen to determine interest in purchase of the painting.