author: Chief Judge Kaye. Smith, J.

text:
    [900 NE2d 136, 871 NYS2d 599]
    In the Matter of the Estate of Abraham XX., Deceased. Kathleen XX., as Administrator of the Estate of Abraham XX., Deceased, Appellant; State of New York, Respondent.
    Argued October 14, 2008;
    decided November 20, 2008

      POINTS OF COUNSEL

      Hinman, Howard & Kattell, LLP, Binghamton (James M. Hayes and Amy Shapiro of counsel), for appellant.
    I. The State of New York is only entitled to recover medical assistance provided to Abraham XX. after establishment of the supplemental needs trust. (Arkansas Dept. of Health & Human Servs. v Ahlborn, 547 US 268.) II. Federal and state prohibitions against recovery of correctly paid Medicaid apply. (Matter of Melendez v Wing, 8 NY3d 598; Arkansas Dept. of Health & Human Servs. v Ahlborn, 547 US 268; Human Dev. Servs. of Port Chester v Zoning Bd. of Appeals of Vil. of Port Chester, 67 NY2d 702; Matter of Dumbleton v Reed, 40 NY2d 586; Gold v United Health Servs.

      Hosps., 95 NY2d 683.) III. The Appellate Division erred in finding that the trust itself provides the State of New York recovery of pre-trust Medicaid—the trust provides for recovery of only what is required by law. (Pocket Books, Inc. v Meyers, 292 NY 58.) IV. The word “total” in the supplemental needs trust statute refers to all Medicaid for which the trust formed the basis of eligibility. (People v Mobil Oil Corp., 48 NY2d 192; Washington State Dept. of Social & Health Servs. v Guardianship Estate of Keffeler, 537 US 371; Matter of Sutka v Conners, 73 NY2d 395; Matter of Town of Brookhaven v New York State Bd. of Equalization & Assessment, 88 NY2d 354; Matter of Consolidated Edison Co. of N.Y. v Department of Envtl. Conservation, 71 NY2d 186; Cricchio v Pennisi, 90 NY2d 296; Sullivan v County of Suffolk, 174 F3d 282, 528 US 950; Cook County v United States ex rel. Chandler, 538 US 119; Traynor v Turnage, 485 US 535; Matter of Mills v Durst, 156 Misc 2d 676.) V. Court approval of the State of New York’s lien for pre-trust Medicaid is res judicata contrary to the holding below, and therefore bars any recovery for that Medicaid from the trust remainder. (Arkansas Dept. of Health & Human Servs. v Ahlborn, 547 US 268; Gold v United Health Servs. Hosps., 95 NY2d 683; Matter of Hunter, 4 NY3d 260; Smith v Russell Sage Coll., 54 NY2d 185; D'Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65; Israel v Wood Dolson Co., 1 NY2d 116; Brown v Spohr, 180 NY 201.) VI. Interest should be awarded from the date funds were paid to the State of New York. (Spodek v Park Prop. Dev. Assoc., 96 NY2d 577; Lawyers’ Fund for Client Protection of State of N.Y. v Bank Leumi Trust Co. of N.Y., 94 NY2d 398.)

      Andrew M. Cuomo, Attorney General, Albany (Kathleen M. Treasure, Barbard D. Underwood and Nancy A. Spiegel of counsel), for respondent.
    I. The State of New York properly received an amount equal to its total Medicaid expenditures pursuant to its remainder interest in the supplemental needs trust and the statutes governing it. (Matter of Hubbell, 302 NY 246; Arkansas Dept. of Health & Human Servs. v Ahlborn, 547 US 268; Gold v United Health Servs. Hosps., 95 NY2d 683; Matter of Chemical Specialties Mfrs. Assn. v Jorling, 85 NY2d 382; Seittelman v Sabol, 91 NY2d 618; Doe v State of New York, 11 AD3d 579; National Org. for Women v Metropolitan Life Ins. Co., 131 AD2d 356; Cricchio v Pennisi, 90 NY2d 296; Sullivan v County of Suffolk, 174 F3d 282.) II. Res judicata does not bar any portion of the State of New York’s remainder interest. (Matter of Hunter, 4 NY3d 260; Matter of City of Lackawanna, 45 AD2d 1; Amo v Little Rapids Corp., 100 NY2d 531; Jobco, Inc. v County of Nassau, 129 AD2d 614.) III. Petitioner is not entitled to predecision interest. (Matter of Bello v Roswell Park Cancer Inst., 5 NY3d 170; Matter of Meloni v Goord, 267 AD2d 977; Brown v State of New York, 89 NY2d 172; Sharapata v Town of Islip, 56 NY2d 332; Krohn v New York City Police Dept., 2 NY3d 329; Matter of Lehigh Val. R.R. Co. v Joseph, 281 App Div 57, 305 NY 853.)
   OPINION OF THE COURT

Chief Judge Kaye.

At issue in this appeal is the scope of the State’s right to reimbursement for Medicaid payments made on behalf of an infant pursuant to the terms of a supplemental needs trust established in accordance with state and federal law. The question is whether the State can recover its remainder interest in an amount equal to the “total medical assistance paid” on behalf of the recipient, or whether the State is limited to the amount expended from the trust’s effective date to the recipient’s death. We hold that the State can recover the entire amount paid from any remaining trust assets.

Background

Kathleen XX. suffered a grand mal seizure during pregnancy and delivered her son, Abraham, prematurely by emergency cesarean section on July 28, 1992. As a result, Abraham suffered from spastic quadriplegic cerebral palsy. He entered custodial care at the Broome Developmental Center (operated by the State Office of Mental Retardation and Developmental Disability [OMRDD]) in 1994, and the State assumed the costs of Abraham’s room and care through the Medicaid program. Kathleen litigated a successful malpractice suit on Abraham’s behalf against her physicians and the hospital. Prior to a $103 million jury verdict, the action settled for $5 million pursuant to a high-low agreement. The State filed a lien for $1,707,884.95 against the proceeds of Abraham’s settlement, representing the Medicaid costs paid from his entry into custodial care through the date of the jury’s verdict on March 23, 1998 (see Social Services Law § 104-b). The State has received full payment of its lien and it is not at issue here.

Payment of the settlement was delayed due to the parties’ dispute regarding allocation of the proceeds. Abraham remained in care during this time, and the State continued to pay his Medicaid costs until a $2.17 million lump-sum settlement payment made him Medicaid-ineligible. After years of litigation and an appeal to this Court (see Gold v United Health Servs. Hosps., 95 NY2d 683 [2001]) the $2.17 million was retroactively placed in a supplemental needs trust (SNT) created on Abraham’s behalf, thereby reviving his Medicaid eligibility. As a result, there exists a gap between the date of the jury’s verdict (also the expiration date of the State’s Medicaid lien)—March 23, 1998—and the date the SNT was funded—September 12, 1999. Reimbursement for Medicaid payments made during this gap is the issue before us.

Abraham died on June 11, 2003, just shy of his 11th birthday. The SNT Agreement provides that upon Abraham’s death, the trustees must pay the State

“to the extent then required by law . . . such amount as shall be necessary to provide reimbursement for expenditures made for medical assistance for Abraham [XX.] . . . through Medicaid . . . and the balance, if any remains, shall be paid to the personal representative of the estate of Abraham [XX.].”

Accordingly, the State filed a verified claim against the trust for just over $1.5 million for Medicaid payments made on Abraham’s behalf from March 24, 1998 through the date of his discharge from the Broome Center in October 2001. Kathleen stipulated to payment of the claim, reserving the right to seek a refund. The State alleges that after payment of its claim, there remained approximately $285,000 in the trust plus title to a home purchased for Abraham.

As relevant to this appeal, Kathleen then petitioned for repayment by the State of $961,810.89, representing the “Gap Medicaid” paid from March 24, 1998 to September 12, 1999. She argued that the State was precluded from recovering funds in excess of its Medicaid lien based on res judicata. Supreme Court agreed in part and ordered a partial refund.

The Appellate Division modified Supreme Court’s order, reversed the partial refund and granted the State’s motion for summary judgment, reasoning that the State’s right to reimbursement derives from the terms of the trust agreement, which designates the State as the primary remainderman. Because Kathleen “elected to avail Abraham of the eligibility benefits of an SNT, [she] is now bound by the terms of the trust agreement to reimburse [the State] for all Medicaid expended on Abraham’s behalf’ (36 AD3d 1085, 1089 [3d Dept 2007]). The court also held that res judicata did not apply to the facts of this case.

On appeal to this Court, Kathleen solely disputes the State’s right to reimbursement for the period from March 24, 1998 (the day after the malpractice suit’s jury verdict) through September 12, 1999 (the day the SNT was funded). She concedes that the State is entitled to retain its recovery of Medicaid payments made after the SNT was funded.

Analysis

A supplemental needs trust is a planning tool used to shelter a severely disabled person’s assets for the dual purpose of securing or maintaining eligibility for state-funded services, and enhancing the disabled person’s quality of life with supplemental care paid by his or her trust assets.

In New York, the SNT—though not so named at the time— originated in a 1978 Surrogate’s Court decision in which the court prevented the State from invading the principal of a testamentary trust created by a father for the lifetime benefit of his severely disabled daughter (Matter of Escher, 94 Misc 2d 952 [1978], affd 75 AD2d 531 [1st Dept 1980], affd 52 NY2d 1006 [1981]). The decision introduced the concept of using a discretionary trust to supplement the care of severely disabled individuals without jeopardizing the individual’s right to government-provided medical care during the beneficiary’s lifetime (see Turano, Practice Commentaries, McKinney’s Cons Laws of NY, Book 17B, EPTL 7-1.12, at 319). A widely-used planning device among parents of disabled children, in 1993 the Legislature codified the SNT in order to provide clarity and uniformity in the law (see EPTL 7-1.12, as added by L 1993, ch 433, § 5).

In the same year that New York State codified the SNT, the United States Congress enacted the Omnibus Budget Reconciliation Act of 1993 (OBRA) to “tighten the eligibility requirements for Medicaid” and to curb abusive asset transfers, especially by the elderly (Rosenberg, Supplemental Needs Trusts for People with Disabilities: The Development of a Private Trust in the Public Interest, 10 BU Pub Int LJ 91, 127 [2000]). The general rule is that a Medicaid candidate’s trust assets are considered “available resources” and count toward determining that candidate’s eligibility for state services.

Disability advocates—concerned about the viability of trusts created by parents to provide for their disabled children’s futures—lobbied the federal government for protection. One such protection materialized in 42 USC § 1396p (d) (4) (A)—the federal provision at issue here—by striking a balance between the tightened eligibility requirements and the heightened needs of severely disabled individuals who receive a lump sum of money sizeable enough to end their Medicaid eligibility. Section 1396p (d) (4) (A) states that,

“[a] trust containing the assets of an individual under age 65 who is disabled . . . and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court [and which provides that] the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter” shall not be considered an “available resource” of the trust beneficiary and shall not impact his or her Medicaid eligibility (emphasis added).

The Medicaid SNT represented “a departure from the rules governing ‘available resources,’ which would otherwise make a person ineligible for Medicaid” (Rosenberg, 10 BU Pub Int LJ at 132). The New York State Legislature enacted a substantially similar provision in 1994 (see Social Services Law § 366 [2] [b] [2] [iii] [A]).

Here, Abraham’s parents took advantage of the Medicaid SNT provision in order to shelter the multi-million-dollar settlement he received as a result of the malpractice suit. The SNT agreement states that upon Abraham’s death the trust shall terminate and “to the extent then required by law” the trustees must “pay to the State . . . such amount as shall be necessary to provide reimbursement for expenditures made for medical assistance for Abraham [XX.] by the State . . . through Medicaid.” When interpreting a trust agreement we usually rely on the words of the trust itself. Here, however, the trust refers us to the Medicaid statutes.

Pursuant to federal and state law, the State held a remainder interest in all amounts remaining in the trust “up to an amount equal to the total medical assistance paid” (42 USC § 1396p [d] [4] [A]) or “up to the total value of all medical assistance paid” (Social Services Law § 366 [2] [b] [2] [iii] [A]) on behalf of the trust’s beneficiary. The question before us is whether “total medical assistance paid” is limited by the date of the trust’s creation, or whether it extends to the lifetime benefits paid on behalf of the recipient.

Despite the 15 years since the OBRA amendments, we have found limited case law addressing the narrow issue now before us. Thus, we are left with the plain language of the statute and the policy behind its enactment. The words of the statute— though perhaps surprising at first blush—are clear and absolute. When a trust is established pursuant to 42 USC § 1396p (d) (4) (A) or Social Services Law § 366 (2) (b) (2) (iii) (A), the beneficiary explicitly provides the State with a right to recover the total Medicaid paid on behalf of that individual. There is no temporal limitation. The sole, though substantial, stated limitation on the State’s recovery is the existence of remaining assets in the trust upon the beneficiary’s death. If assets are available, according to the words of the statute the State may recover the total amount of benefits paid throughout the beneficiary’s lifetime.

This construction advances the underlying purpose of the bargain struck between the SNT beneficiary and the State. The SNT is available only to applicants under the age of 65 with severe disabilities as defined by statute. Unless the applicant placed excess assets in the Medicaid SNT for supplemental care, he or she would no longer be eligible for Medicaid, thus relieving the State of a substantial financial burden. In order to further Medicaid’s purpose of providing medical assistance to needy persons, the State agrees to continue paying Medicaid costs—in instances where it would otherwise be relieved of this obligation—in exchange for the possibility of reimbursement upon the recipient’s death. The State in a sense is like an insurer calculating risk. For every recipient who depletes the trust before death, the State can expect some trusts to have sufficient assets upon a recipient’s death to offset the additional cost of continuing Medicaid payments for these severely disabled individuals who otherwise would be ineligible. Moreover, the State’s right to reimbursement occurs only upon the death of the beneficiary—at a time when the life-enhancing purpose of the trust can no longer be effectuated. The Medicaid SNT reflects a policy decision to balance the needs of the severely disabled and the State’s need for funds to sustain the system.

Nor do the anti-recovery provisions of the federal and state Medicaid statutes change this result. Kathleen XX. asserts that the terms of the SNT must be modified by Medicaid’s anti-recovery provisions. Social Services Law § 369 (2) (b) (i) provides,

“[notwithstanding any inconsistent provision of this chapter or other law, no adjustment or recovery may be made against the property of any individual on account of any medical assistance correctly paid to or on behalf of an individual under this title, except that recoveries must be pursued [in circumstances inapplicable to this case].”

The federal and state statutes are similar, but New York’s provision restricts the bar to recovery of correctly paid Medicaid “against the property of any individual” whereas the federal provision restricts the recovery of correctly paid Medicaid without limiting the source of recovery (see 42 USC § 1396p [b] [1] [“No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made”]). All parties agree that the Medicaid paid on behalf of Abraham was “correctly paid.” Kathleen XX. argues that the State’s recovery of correctly paid Medicaid from the remainder of the trust assets must be limited to Medicaid paid from the date the trust was established. Any further recovery, she argues, would violate the anti-recovery provisions. We disagree.

The anti-recovery provisions are not applicable to the unique context of SNTs created under 42 USC § 1396p (d) (4) (A) or Social Services Law § 366 (2) (b) (2) (iii) (A). The anti-recovery provisions are rules of general applicability for all Medicaid recipients regardless of the severity of disability. The SNT statute, by contrast, specifically addresses the unique and difficult situation faced by severely disabled individuals with assets that are sufficient to end their Medicaid eligibility but insufficient to account for their medical costs. One provision is distinct from the other. There is no need to look beyond the terms of the SNT statute and the terms of the SNT itself.

More compellingly, appellant’s construction does not address the anomaly it creates. As stated, no one disputes that the Medicaid paid on behalf of Abraham was correctly paid. That includes Medicaid paid after the establishment of the trust. Therefore, even under appellant’s construction, the State will recover correctly paid Medicaid pursuant to the terms of the SNT. While the date of the SNT’s establishment may be a convenient limitation of the State’s remainder interest, there is no basis in the language of the statutes limiting the State’s recovery of correctly paid Medicaid from that date.

Moreover, it should be noted that although the express exceptions do not apply to this case, they are helpful to deciphering the application of SNT reimbursement. Generally, the statutes permit the State to recover correctly paid Medicaid in circumstances where the individual or his dependents will no longer need the resources (see generally 42 USC § 1396p [b] [2]; Social Services Law § 369 [2] [b] [i], [ii], [iii]). Here, too, recovery occurs only upon the recipient’s death and only if assets remain in the trust.

Finally, appellant argues that the United States Supreme Court’s decision in Arkansas Dept. of Health & Human Servs. v Ahlborn (547 US 268 [2006]) mandates that the anti-recovery provisions apply in this context. We disagree. In Ahlborn, the Supreme Court held that a state’s assignment right to “payment for medical care from any third party” (42 USC § 1396k [a] [1] [A]) grants the state a right only to the portion of a judgment or settlement allocated to medical care and not to portions allocated toward lost wages or pain and suffering. In so holding, the Supreme Court added that Arkansas’s statute—which permitted the state to recover from the entirety of the settlement—conflicted with the anti-lien provision found in 42 USC § 1396p (a). The anti-lien provision is not at issue in this case and the U.S. Supreme Court expressly declined to address the impact, if any, of the anti-recovery provision in 42 USC § 1396p (b) (see Ahlborn, 547 US at 284 n 13). Ahlborn did not involve the interpretation of an SNT, or the interpretation of the Medicaid SNT statute, and it is therefore inapplicable to the matter before us.

We recognize that in this case the State would not have been entitled to reimbursement for Medicaid paid from March 24, 1998 through September 12, 1999 had the SNT not been ereated. Equally significant, however, is that Abraham would not have been entitled to receive the benefits of Medicaid throughout his life but for the establishment of the SNT. The language of the statute is plain and clear, and the policy reasons support our interpretation. That the result may sometimes inure to the State’s benefit as opposed to the beneficiary’s estate is the product of a calculated legislative decision and a calculated choice by the family in setting up the SNT.

We have considered appellant’s remaining arguments and conclude that they are without merit.

Accordingly, the judgment appealed from and order of the Appellate Division brought up for review should be affirmed, with costs.

Smith, J.

(dissenting). The federal statute that allows use of a supplemental needs trust (SNT) to preserve Medicaid eligibility provides that, after the beneficiary’s death, the State will receive from the SNT “an amount equal to the total medical assistance paid on behalf of the individual” (42 USC § 1396p [d] [4] [A]). The majority reads this to mean “the total medical assistance paid during the individual’s lifetime.” This is a possible reading, but the words can also be reasonably read to mean “the total medical assistance paid as a result of the SNT,” and I think that is the meaning Congress is more likely to have intended. Unless the words are read in that way, a class of disabled people—those who received significant Medicaid payments before they had enough money to fund a trust—will never become SNT beneficiaries, because their families will know that the effect of establishing an SNT will be to impoverish their estates.

The statute defines an SNT as:

“A trust containing the assets of an individual under age 65 who is disabled (as defined in section 1382c (a) (3) of this title) and which is established for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court if the State will receive all amounts remaining in the trust upon the death of such individual up to an amount equal to the total medical assistance paid on behalf of the individual under a State plan under this subchapter.” (42 USC § 1396p [d] [4] [A].)

The law allows the assets of an SNT to be disregarded in determining eligibility for Medicaid, thus producing an unusual situation: a person eligible for Medicaid who is not poor, and may even be very wealthy. Often, as in this case, the wealth is the result of a recovery in a tort action. Congress allows the use of an SNT to preserve Medicaid eligibility for the possessors of such wealth only where the beneficiary of the trust is seriously disabled—if an adult, “unable to engage in any substantial gainful activity,” or, if a child, afflicted with “marked and severe functional limitations” (42 USC § 1382c [a] [3] [A], [C] [i]).

The purpose of the statute is “to allow a person with a disability to have an additional source of support during her lifetime” (Rosenberg, Supplemental Needs Trusts for People With Disabilities: The Development of a Private Trust in the Public Interest, 10 BU Pub Int LJ 91, 132 [2000]). And since the purpose of the trust is to help the beneficiary, not to enrich his or her heirs, it would not be fair to let the heirs get the assets of the SNT upon the beneficiary’s death without reimbursing the State for Medicaid payments. The arrangement may be thought of as a loan—indeed, a commentator has labeled the SNT a “Payback Trust” and “A Bargain for Life” (id. at 131). The essence of the bargain is that the State pays Medicaid during the beneficiary’s lifetime, and is paid back from anything remaining in the trust after the beneficiary’s death.

But what of the beneficiary who was already a Medicaid recipient when he or she was poor—before either the SNT or the assets to fund it existed? This was the situation of Abraham, the beneficiary in this case, for several years before he recovered a large tort award. Most of the Medicaid payments made during that time were recouped by the State through the enforcement of its lien on Abraham’s recovery (see Gold v United Health Servs. Hosps., 95 NY2d 683 [2001]), but there remained a period of several months—the period from the date the verdict was rendered to the date it was paid—during which the State paid for Abraham’s care and was not reimbursed for it; during that period, Abraham was entitled to Medicaid simply because he needed medical care and did not have any money. No SNT was necessary to make him Medicaid-eligible. The main issue in this case is whether the State can recover some $472,000 in Medicaid payments made during that interval. (Abraham’s estate disputes a larger sum, but I would resolve that dispute in the State’s favor.)

A similar issue could arise in other cases and involve much larger amounts. Suppose, for example, that an adult who has been a Medicaid recipient all his life, and for whom the State has paid millions, then has an accident resulting in a large tort award—or simply receives a large inheritance. In such a case, the State ordinarily will get none of its Medicaid money back, no matter how immensely rich the former Medicaid recipient has become. With exceptions not relevant here, federal law provides: “No adjustment or recovery of any medical assistance correctly paid on behalf of an individual under the State plan may be made” (42 USC § 1396p [b] [1]). In Abraham’s case, if no SNT had been created, this statute would prevent the recovery of the $472,000 at issue here.

But under the majority’s holding, the creation of an SNT changes the picture, and results in a windfall to the State. Because the majority reads “total medical assistance paid on behalf of the individual” to mean everything paid during the individual’s lifetime, the effect of the SNT in the case of the hypothetical adult is to make the unrecoverable millions in Medicaid payments recoverable from the SNT at the beneficiary’s death. In practice, this probably will not happen for the simple reason that, if correctly advised, the adult’s family will not create an SNT. But surely there is no good reason why that particular disabled person should lose the benefit of a federal statute designed to help people with similar disabilities. I would therefore read the statute in a way consistent with its purpose, taking “total medical assistance paid” to include only the total paid as a result of the SNT’s existence—thus effectuating the loan or “payback” that the authors of the statute plainly intended.

The majority says that its construction advances the statutory purpose because it provides the State with a funding source: “For every recipient who depletes the trust before death, the State can expect some trusts to have sufficient assets upon a recipient’s death to offset the additional cost . . . (Majority op at 436.) I am unpersuaded, because the State will actually get its windfall only in the exceptional case where a trust is unforeseeably left with enough assets to pay back pre-SNT Medicaid. Where that event is foreseeable, and where the preSNT Medicaid is substantial, the beneficiary’s family simply will not create the trust at all. In a way, it is true, that this will benefit the State, because there will be no SNT and no Medicaid payments going forward—but it seems highly unlikely that it was Congress’s purpose to benefit the State by deterring the creation of SNTs.

For these reasons, I would reverse the Appellate Division’s order.

Judges Ciparick, Read, Pigott and Jones concur with Chief Judge Kaye; Judge Smith dissents and votes to reverse in a separate opinion; Judge Geaffeo taking no part.

Judgment appealed from and order of the Appellate Division brought up for review affirmed, with costs.

      . The daily cost of room and care when Abraham entered the Broome Center was $828.42. It rose to $2,164.59 during his six years at the facility.

      . The precise dates of this gap vary by a few days throughout the record. We have adopted the dates utilized by both parties in their briefs to this Court.

      . The Appellate Division had remitted to Supreme Court for fact-finding with respect to Kathleen’s additional claim to a refund of $34,633.64, representing Medicaid paid from October 16, 2000 to October 31, 2000. A final judgment of Supreme Court dismissing this claim was entered from which this appeal is now taken.

      . As in virtually every matter that reaches our Court, an argument also can be made for the opposite result—and the dissent does so here. We conclude, however, that the better result is to affirm the Appellate Division. First, the best evidence of legislative intent is the words Congress has used in the governing statute. Congress has said that, in exchange for otherwise unavailable Medicaid assistance, an SNT beneficiary must grant the State a remainder interest in the trust assets equal to the “total medical assistance paid on behalf of the individual.” The only limitation, if it can be so labeled, is the limitless word “total.” Second, Congress’s decision to make the SNT available to severely disabled individuals (rather than their families) does not mean it is an appropriate planning tool for every situation—each family must weigh its particular circumstances in receiving the benefits of this tool against its potential disadvantages. Whether the State receives a “windfall”—or nothing—as a result of this bargain, creating the SNT in either event will clearly benefit the severely disabled individual throughout his or her lifetime, which is the very purpose of the law.


source: Caselaw Access Project

author: Ciparick, J.

license: Public Domain

text:
    [900 NE2d 144, 871 NYS2d 607]
    Continental Casualty Company, Appellant, v Terrance D. Stradford, Defendant, and Hector Gunaratne et al., Respondents.
    Argued October 22, 2008;
    decided November 25, 2008

      POINTS OF COUNSEL

      White Fleischner & Fino, LLP, New York City (Benjamin A. Fleischner, Nancy Davis Lyness and Janet P. Ford of counsel), for appellant.
    I. The trial court and the Appellate Division properly concluded that Continental Casualty Company had sustained its burden of proving Terrance Stradford’s noncooperation in violation of the insurance contract. (Thrasher v United States Liab. Ins. Co., 19 NY2d 159; Baghaloo-White v Allstate Ins. Co., 270 AD2d 296; Physicians’ Reciprocal Insurers v Keller, 243 AD2d 547; Commercial Union Ins. Co. v Burr, 226 AD2d 416; Pawtucket Mut. Ins. Co. v Soler, 184 AD2d 498; New York State Ins. Fund v Merchants Ins. Co. of N.H., 5 AD3d 449; Argento v Aetna Cas. & Sur. Co., 184 AD2d 487; 304 Meat Corp. v New York Prop. Ins. Underwriting Assn., 188 AD2d 382; American Tr. Ins. Co. v Fuentes, 1 Misc 3d 787; Matter of Liberty Mut. Ins. Co. v Roland-Staine, 21 AD3d 771.) II. The Appellate Division majority erred in concluding that Continental Casualty Company’s disclaimer was untimely. (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; Matter of Allstate Ins. Co. v Cruz, 30 AD3d 511; First Fin. Ins. Co. v Jeteo Contr. Corp., 1 NY3d 64; Allstate Ins. Co. v Gross, 27 NY2d 263; Commercial Union Ins. Co. v Burr, 226 AD2d 416; Mount Vernon Fire Ins. Co. v 170 E. 106th St. Realty Corp., 212 AD2d 419; Allstate Ins. Co. v Loester, 177 Misc 2d 372; Pawtucket Mut. Ins. Co. v Soler, 184 AD2d 498; Matter of Liberty Mut. Ins. Co. v Roland-Staine, 21 AD3d 771; New York State Ins. Fund v Merchants Ins. Co. of N.H., 5 AD3d 449.) III. The purported delay in disclaiming was not untimely because Terrance Stradford could have cooperated and maintained coverage through October 13, 2004. (Commercial Union Ins. Co. v Burr, 226 AD2d 416.) IV. Insurance Law § 3420 (d) does not apply to the circumstances underlying this coverage action. (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; TIG Ins. Co. v Town of Cheektowaga, 142 F Supp 2d 343; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640; Dodge v Legion Ins. Co., 102 F Supp 2d 144; Moncada v Rubin-Spangle Gallery, Inc., 835 F Supp 747; First Fin. Ins. Co. v Jetco Contr. Corp., 1 NY3d 64; Zappone v Home Ins. Co., 55 NY2d 131.) V. Claimants may not recover from Continental Casualty Company because their rights are no greater than those of Continental’s insured. (D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659; Coleman v New Amsterdam Cas. Co., 247 NY 271.)

      Lutfy & Santora, Staten Island (James L. Lutfy of counsel), for respondents.
    I. Continental Casualty Company’s disclaimer was untimely as a matter of law. (Reyes v Diamond State Ins. Co., 35 AD3d 830; Bovis Lend Lease LMB, Inc. v Royal Surplus Lines Ins. Co., 27 AD3d 84; Allcity Ins. Co. v 601 Crown St. Realty Corp., 264 AD2d 315; First Fin. Ins. Co. v Jeteo Contr. Corp., 1 NY3d 64; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; Those Certain Underwriters at Lloyds, London v Gray, 49 AD3d 1; Tully Constr. Co., Inc. v TIG Ins. Co., 43 AD3d 1150; West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278; Allcity Ins. Co. v 601 Crown St. Realty Corp., 264 AD2d 315; Thrasher v United States Liab. Ins. Co., 19 NY2d 159.) II. Plaintiff-appellant’s point TV which alleges that Insurance Law § 3420 (d) does not apply to the matter before this Court, is not only an argument that was not raised before the lower court and the Appellate Division, but also has no support in statutory law and the common law. III. Plaintiff-appellant’s argument that a malpractice claim does not fall within the meaning of Insurance Law § 3420 (d) was not raised before the Appellate Division and the lower court and has no statutory or common-law support.
   OPINION OF THE COURT

Ciparick, J.

Over the course of nearly six years, defendant Terrance Stradford cooperated only sporadically with his professional liability insurer, plaintiff Continental Casualty Company, in the defense of two dental malpractice actions. We are asked to determine whether plaintiff timely disclaimed coverage in those actions on the basis of Stradford’s noncooperation. Because issues of fact remain with respect to the timeliness of plaintiffs disclaimer, we modify the order of the Appellate Division by denying summary judgment to defendants.

I.

In October 1998, defendants Hector Gunaratne and his wife, Rose, and Sumanadasa Perera, as parent and natural guardian of Prashan Perera, separately commenced dental malpractice actions against Stradford. A professional liability policy that Continental issued to Stradford was in effect at that time. The policy required Stradford to notify his insurer of the Gunaratne and Perera actions, gave Continental the right to defend him in those actions, and obligated the insured to “fully cooperate” in the company’s litigation and settlement efforts. This cooperation clause explicitly required Stradford’s attendance at hearings and trials, as well as his assistance in the securing and giving of evidence and obtaining the attendance of witnesses.

About a month after the underlying malpractice actions were initiated, Stradford notified Continental. Thereafter, Continental’s employees and counsel whom the company retained to defend Stradford sought to obtain defendants’ treatment records and other materials from him, solicit his views on potential expert witnesses, schedule depositions and meetings, and discuss potential settlements. These many requests took the form of largely unanswered correspondence and telephone calls to Stradford’s home and office, and failed visits by defense counsel to Stradford’s office pursuant to prearranged meetings. Stradford ignored the vast majority of Continental’s requests or otherwise refused to cooperate with the company. In response, Continental repeatedly warned Stradford that his noncooperative conduct could jeopardize his coverage. These warnings, however, went unheeded.

Nevertheless, at various times, Stradford indicated an awareness of his duty to cooperate and expressed his willingness to do so. For example, Stradford made multiple promises to provide the requested documents, which he claimed were located on his boat or at his residence. Further, although Stradford’s deposition in Gunaratne was rescheduled multiple times due to his unexplained absences, he eventually appeared and was deposed. Then, after more than four years had passed without his production of a single relevant document, Stradford participated in a July 2, 2003 conference call—which he had requested—to discuss a possible settlement of Gunaratne.

During that call, Stradford asked for new counsel in both underlying actions, claiming that he had lost confidence in his present attorney’s ability to zealously defend him due to the attorney’s actions in another malpractice action brought against him. Continental agreed to the request, Stradford’s attorney moved to be relieved, and Supreme Court marked all cases pending against Stradford off-calendar, pending the substitution of new counsel. Despite calls and a letter from his new counsel, Stradford never executed the necessary form to effect the requested substitution.

On July 8, 2004, Continental mailed Stradford two detailed letters—one each for Gunaratne and Perera. In the main, the letters set forth his history of noncompliance, evasion and broken commitments. They also demanded that Stradford schedule a meeting with his newly-retained counsel for a date on or before August 13, warned that further noncooperation “may imperil” his coverage, and, given adverse expert findings regarding Stradford’s care of defendants, recommended that he consent to settlement of both actions. On August 11, both letters were returned to Continental as “Unclaimed.” Approximately two months later, on October 13, 2004, Continental’s outside counsel sent a disclaimer letter to Stradford. Two days after its disclaimer was issued, Continental commenced the present action, seeking a declaratory judgment that it had no duty to defend or indemnify Stradford in the Gunaratne and Perera actions.

The decision-making process that Continental employed prior to disclaiming and bringing this action was described in the deposition testimony of Thomas Morelli, who by July 8, 2004 was the Continental employee responsible for Gunaratne and Perera. According to him, the “normal protocol” involved a recommendation by him to his director, who would then make a recommendation to Continental’s in-house coverage counsel. In addition, in connection with the Gunaratne and Perera disclaimers, Morelli testified that Continental “sought an opinion from outside counsel regarding [its] coverage position.”

Continental’s decision to disclaim was bolstered by a declaratory judgment issued on June 1, 2004 in two other malpractice actions then pending against Stradford, O’Halloran and Shields. There, the court held that Stradford’s failure to respond to multiple letters seeking his cooperation and his absence on trial dates constituted sufficient grounds for a disclaimer of coverage.

In the present action, Continental moved for summary judgment on its declaratory judgment claim that Stradford’s noncooperation had terminated the company’s contractual obligation to him. Defendants cross-moved for summary judgment, arguing that the company’s disclaimer was untimely and, in the alternative, that it had not carried its burden of proving Stradford’s noncooperation. Supreme Court granted Continental’s motion in all respects and similarly denied the cross motion. The court concluded that Stradford was not entitled to a defense or indemnification because of his multiple breaches of the cooperation clause.

In a 3-2 decision, the Appellate Division reversed. All members of the panel concluded that Continental had carried its burden of establishing Stradford’s noncooperation. The majority held, however, that Continental’s approximately two-month delay in disclaiming—measured from August 11, 2004 (the date its final letters were returned unclaimed)—was unreasonable as a matter of law. The dissent disagreed, reasoning that Continental’s need to carefully analyze Stradford’s conduct and to consult with counsel to ensure that the company had discharged its “heavy burden” of attempting to bring about his cooperation prior to disclaiming supported the conclusion that Continental’s delay was “explained and . . . reasonable under the circumstances” (46 AD3d 598, 604, 605 [2007, Goldstein and Schmidt, JJ., dissenting] [internal quotation marks omitted]).

Plaintiff appeals from the order of reversal based on a dual dissent on a question of law. We now modify by denying defendants’ cross motion for summary judgment.

II.

On this appeal, defendants do not dispute the lower courts’ conclusions that Continental was entitled to disclaim due to Stradford’s noncooperation. According to them, the timeliness of that disclaimer is the sole issue before us. We now turn to that single issue.

Even if an insurer possesses a valid basis to disclaim for noncooperation, it must still issue its disclaimer within a reasonable time (see 14 Couch on Insurance 3d § 199:69). When construing Insurance Law § 3420 (d), which requires an insurer to issue a written disclaimer of coverage for death or bodily injuries arising out of accidents “as soon as is reasonably possible,” we have made clear that timeliness almost always presents a factual question, requiring an assessment of all relevant circumstances surrounding a particular disclaimer (First Fin. Ins. Co. v Jeteo Contr. Corp., 1 NY3d 64, 69 [2003]; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1030 [1979]; Allstate Ins. Co. v Gross, 27 NY2d 263, 270 [1970]). One of those circumstances is the time necessary for an insurer to conduct a prompt investigation into those grounds supporting a potential disclaimer (see Gross, 27 NY2d at 270; First Fin. Ins. Co., 1 NY3d at 69). Although we have declined to provide a “fixed yardstick” against which to measure reasonableness of a delay in disclaiming coverage (see id. at 70), we have said that cases in which the reasonableness of an insurer’s delay may be decided as a matter of law are exceptional and present extreme circumstances (see Hartford, 46 NY2d at 1030; Gross, 27 NY2d at 270). This is not such a case.

Fixing the time from which an insurer’s obligation to disclaim runs is difficult. That period begins when an insurer first becomes aware of the ground for its disclaimer (see First Fin. Ins. Co., 1 NY3d at 68-69, citing Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1056 [1991]). But unlike cases involving late notice of claims (see id. at 66-67; Hartford, 46 NY2d at 1029; Gross, 27 NY2d at 268) or other clearly applicable coverage exclusions, an insured’s noncooperative attitude is often not readily apparent. Indeed, as here, such a position can be obscured by repeated pledges to cooperate and actual cooperation.

The challenge of setting an appropriate date is only heightened by the heavy burden that an insurer seeking to establish a noncooperation defense must carry (see Thrasher v United States Liab. Ins. Co., 19 NY2d 159, 168-169 [1967]; accord Matter of Empire Mut. Ins. Co. [Stroud—Boston Old Colony Ins. Co.], 36 NY2d 719, 721 [1975]). To further this State’s policy in favor of providing full compensation to injured victims, who are unable to control the actions of an uncooperative insured, insurers must be encouraged to disclaim for noncooperation only after it is clear that further reasonable attempts to elicit their insured’s cooperation will be futile (see Thrasher, 19 NY2d at 168; see also Matter of Liberty Mut. Ins. Co. v Roland-Staine, 21 AD3d 771, 772 [1st Dept 2005] [“strict scrutiny” of facts supporting noncooperation defense required to protect “innocent injured parties from suffering the consequences of a lack of coverage”]). In some cases, such as where an insured openly disavows its duty to cooperate (see e.g. Allcity Ins. Co. v 601 Crown St. Realty Corp., 264 AD2d 315, 316-317 [1st Dept 1999]), little time is needed to evaluate the relevant noncooperative conduct before disclaiming. But here, where an insured has punctuated periods of noncompliance with sporadic cooperation or promises to cooperate, some reasonably longer period for analysis may be warranted.

The Appellate Division majority acknowledged that even after June 1, 2004, when Continental received a declaratory judgment that it was entitled to disclaim coverage in the O’Halloran and Shields actions, the carrier “was continuing to pursue its heavy burden” of attempting to bring about Stradford’s compliance in the two actions relevant here (see 46 AD3d at 601). The court also found that the time for disclaimer ran from August 11, 2004, the date when what became Continental’s final letters to Stradford were returned unclaimed. Following that date, there is no indication that the company engaged in further communication with Stradford. Thus, on these facts, we agree with both of the Appellate Division’s conclusions.

Contrary to the Appellate Division, however, we conclude that a question of fact remains regarding the amount of time required for Continental to complete its evaluation of Stradford’s conduct in the two underlying actions. In this case, the reasonableness of an approximately two-month delay to analyze the pattern of obstructive conduct that permeated the insurer’s relationship with its insured for almost six years presents a question of fact that precludes entry of summary judgment for either plaintiff or for defendants (see First Fin. Ins. Co., 1 NY3d at 69 [“(I)nvestigation into issues affecting an insurer’s decision whether to disclaim coverage obviously may excuse delay in notifying the policyholder of a disclaimer”]; Hartford, 46 NY2d at 1030 [“(A) two-month delay may often be easily justified, if in fact there be justification”]).

Accordingly, the order of the Appellate Division should be modified, without costs, by denying the cross motion of defendants Gunaratne and Perera for summary judgment and, as so modified, affirmed.

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

Order modified, etc.

      . Because defendant Stradford has never appeared in this action, use of the term “defendants” in this opinion only refers to defendants Gunaratne and Perera.

      . Stradford’s deposition in Perera was rescheduled at least twice due to his failure to appear. Although there is no indication in this record that he was deposed in that action, defendants’ counsel swore in an affirmation that he possessed a transcript showing that such deposition did occur.

      . In April and May of 2005, Supreme Court entered judgments awarding defendants damages of $116,200 and $50,000, respectively, against Stradford.

      . Continental argues that Insurance Law § 3420 (d)’s timeliness standard is inapplicable here. Because that argument was not presented to the courts below, we decline to consider it (see Sega v State of New York, 60 NY2d 183, 190 n 2 [1983]; Scott v Morgan, 94 NY 508, 515 [1884]).


author: Read, J.

text:
    [901 NE2d 187, 872 NYS2d 696]
    James J. Moran et al., Respondents, v Mehmet Erk et al., Appellants.
    Argued October 22, 2008;
    decided November 25, 2008

      POINTS OF COUNSEL

      Harter Secrest & Emery LLP, Buffalo (John G. Horn of counsel), for appellants.
    I. The lower courts erred in concluding that respondents acted in bad faith when they decided not to purchase appellants’ house. (Pepitone v Sofia, 203 AD2d 981; Niederhofer v Lindner, 6 AD3d 1218; Nelson v Ring, 136 AD2d 878; Ulrich v Daly, 225 AD2d 229; Schreck v Spinard, 13 AD3d 1027; Rowe v Estate of Samuels, 42 AD3d 744; McKenna v Case, 123 AD2d 517; Kirke La Shelle Co. v Armstrong Co., 263 NY 79; Wieder v Skala, 80 NY2d 628; Van Iderstine Co. v Barnet Leather Co., 242 NY 425.) II. The lower courts erred in concluding that respondents prevented their attorney from “considering” the contract. (Murphy v American Home Prods. Corp., 58 NY2d 293; Neuman v Pike, 591 F2d 191; In re Gulf Oil/Cities Serv. Tender Offer Litig., 725 F Supp 712; Shear v National Rifle Assn., 606 F2d 1251; District-Realty Tit. Ins. Corp. v Ensmann, 767 F2d 1018; Schreck v Spinard, 13 AD3d 1027.) III. Judicial inquiry into what an attorney should consider in deciding whether to disapprove a real estate contract is unwarranted, improper and dangerous. (Pelusio v Chen, 3 Misc 3d 1106[A], 2003 NY Slip Op 51727[U]; Niederhofer v Lindner, 6 AD3d 1218; Ulrich v Daly, 225 AD2d 229.)

      Scott D. Cannon, Geneseo, for respondents.
    I. Respondents acted in bad faith by instructing their attorney to disapprove the contract. (511 W 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Dalton v Educational Testing Serv., 87 NY2d 384; Murphy v American Home Prods. Corp., 58 NY2d 293; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; McKenna v Case, 123 AD2d 517; Ulrich v Daly, 225 AD2d 229; Pelusio v Chen, 3 Misc 3d 1106[A], 2003 NY Slip Op 51727[U]; Van Iderstine Co. v Barnet Leather Co., 242 NY 425; Niederhofer v Lindner, 6 AD3d 1218; Nelson v Ring, 136 AD2d 878.) II. Adopting respondents’ argument will create a right of cancellation/reseission. III. The arguments submitted in the amicus brief are misplaced. (Christy v Premo, 194 AD2d 910; Pelusio v Chen, 3 Misc 3d 1106[A], 2003 NY Slip Op 51727DJ]; Ulrich v Daly, 225 AD2d 229; Schreck v Spinard, 13 AD3d 1027; Maxton Bldrs. v Lo Galbo, 68 NY2d 373; Big Apple Car v City of New York, 204 AD2d 109.)

      Couch White, LLP, General Counsel, New York State Associa

      tion of Realtors, Inc., Albany (Michael T. Wallender of counsel), for New York State Association of Realtors, Inc., amicus curiae.
    I. In New York, typically in “upstate” areas, contracts for the purchase and sale of residential real estate are prepared by real estate licensees and contain “attorney approval” clauses in accordance with the standards of Matter of Duncan & Hill Realty v Department of State of State of N.Y. (62 AD2d 690 [1978]). II. In the contemporary New York real estate marketplace, “attorney approval” clauses are generally understood to enable a party’s attorney to disapprove a proposed contract for any reason, without limitation. (Brooke Group v JCH Syndicate 488, 87 NY2d 530; Slamow v Del Col, 174 AD2d 725, 79 NY2d 1016; Brown Bros. Elec. Contrs. v Beam Constr. Corp., 41 NY2d 397; Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62; Murphy v American Home Prods. Corp., 58 NY2d 293; Triton Partners v Prudential Sec., 301 AD2d 411; Delta Props. v Fobare Enters., 251 AD2d 960; Namad v Salomon Inc., 74 NY2d 751; Graff v Billet, 64 NY2d 899; Nelson v Ring, 136 AD2d 878.)
   OPINION OF THE COURT

Read, J.

On December 13, 1995, defendants Mehmet and Susan Erk signed a real estate contract to purchase the home of plaintiffs James J. and Kathleen D. Moran, a 5,000-square-foot ranch-style house located in Clarence, New York. The contract, which was executed by the Morans on December 22, 1995, provided for a purchase price of $505,000, and contained a rider with an “ATTORNEY APPROVAL CONTINGENCY” stating as follows:

“This Contract is contingent upon approval by attorneys for Seller and Purchaser by the third business day following each party’s attorney’s receipt of a copy of the fully executed Contract (the ‘Approval Period’). ... If either party’s attorney disapproves this Contract before the end of the Approval Period, it is void and the entire deposit shall be returned.”

Both the contract and the rider were form documents copyrighted and approved by the Greater Buffalo Association of Realtors, Inc. and the Bar Association of Erie County.

After signing the contract, the Erks developed qualms about purchasing the Morans’ house. They discussed their misgivings with each other and with friends and family, and ultimately decided to buy a different residence. As a result, they instructed their attorney to disapprove the contract, and she did so on December 28, 1995, which was within the three-day period for invoking the attorney approval contingency.

The Morans—who had moved out of their Clarence residence in September 1995—kept the house on the market until it was eventually sold for $385,000 in late 1998. Shortly thereafter, they sued the Erks in Supreme Court, alleging breach of contract. They sought to recover as damages the difference between the contract price of $505,000 and the eventual sale price of $385,000, as well as “carrying costs” for marketing the Clarence property for almost three years beyond the date of the 1995 contract with the Erks.

After a bench trial, Supreme Court found in the Morans’ favor, and entered a judgment against the Erks for $234,065.75, which represented the difference between the contract price and the eventual sale price, plus statutory interest. Citing McKenna v Case (123 AD2d 517 [4th Dept 1986]) and Ulrich v Daly (225 AD2d 229 [3d Dept 1996]), Supreme Court opined that “[i]t is well settled law that where a Buyer acts in bad faith by instructing his attorney to disapprove a real estate contract, the condition that the contract be approved by an attorney is deemed waived and a contract is formed” (21 Misc 3d 1137[A], 2006 NY Slip Op 52668[U], *5). Likewise relying on McKenna, the Appellate Division affirmed in a short memorandum opinion (45 AD3d 1329 [2007]). We subsequently granted the Erks’ motion for leave to appeal (10 NY3d 704 [2008]), and now reverse.

Attorney approval contingencies are routinely included in real estate contracts in upstate New York (see e.g. Dorothy H. Ferguson, Subject to the Approval of My Attorney Clauses, 35 NY Real Prop LJ 35 [spring/summer 2007]; Alice M. Noble-Allgire, Attorney Approval Clauses in Residential Real Estate Contracts—Is Haifa Loaf Better than None?, 48 U Kan L Rev 339, 342 [2000]). Requiring a real estate contract to be “subject to” or “contingent upon” the approval of attorneys for both contracting parties ensures that real estate brokers avoid the unauthorized practice of law (see Matter of Duncan & Hill Realty v Department of State of State of N.Y., 62 AD2d 690, 701 [4th Dept 1978], lv denied 45 NY2d 709, 821 [1978]; 1996 Ops Atty Gen No. 96-F11), and allows both contracting parties to have agents representing their respective legal interests (see generally Real Property Law § 443 et seq.; Rivkin v Century 21 Teran Realty LLC, 10 NY3d 344, 352-356 [2008] [discussing brokers’ agency relationships and duties in real estate transactions, and emphasizing that, absent express disclosure to the contrary, a real estate broker does not represent the interests of both parties to a transaction]). Where a real estate contract states that it is “subject to” or “contingent upon” the approval of each party’s attorney, this language means what is says: no vested rights are created by the contract prior to the expiration of the contingency period (see Black’s Law Dictionary 828 [8th ed 2004], contingent interest [“An interest that the holder may enjoy only upon the occurrence of a condition precedent” (emphasis added)]).

Here, as previously noted, the contract between the Erks and the Morans explicitly stated that “[t]his Contract is contingent upon approval by attorneys for Seller and Purchaser by the third business day following each party’s attorney’s receipt of a copy of the fully executed Contract,” and further provided that “[i]f either party’s attorney disapproves this Contract before the end of the Approval Period, it is void” (emphases added). The Morans argue that the contract nonetheless created an implied limitation upon an attorney’s discretion to approve or disapprove the contract. We do not ordinarily read implied limitations into unambiguously worded contractual provisions designed to protect contracting parties. The Morans, however, contend—and the lower courts apparently agreed—that the implied covenant of good faith and fair dealing implicitly limits an attorney’s ability to approve or disapprove a real estate contract pursuant to an attorney approval contingency. This argument misconstrues the implied covenant of good faith and fair dealing under New York law.

The implied covenant of good faith and fair dealing between parties to a contract embraces a pledge that “neither party shall do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract” (511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153 [2002], quoting Dalton v Educational Testing Serv., 87 NY2d 384, 389 [1995] [additional citation omitted]). Yet the plain language of the contract in this case makes clear that any “fruits” of the contract were contingent on attorney approval, as any reasonable person in the Morans’ position should have understood (see 511 W. 232nd Owners Corp., 98 NY2d at 153 [implied covenant of good faith and fair dealing encompasses “promises which a reasonable person in the position of the promisee would be justified in understanding were included” (citations omitted)]).

Further, considerations of clarity, predictability, and professional responsibility weigh against reading an implied limitation into the attorney approval contingency. Clarity and predictability are particularly important in the interpretation of contracts (see Maxton Bldrs. v Lo Galbo, 68 NY2d 373, 381 [1986] [“when contractual rights are at issue, where it can reasonably be assumed that settled rules are necessary and necessarily relied upon, stability and adherence to precedent are generally more important than a better or even a ‘correct’ rule of law” (some internal quotation marks and citation omitted)]), and “[t]his is perhaps true in real property more than any other area of the law” (Holy Props. v Cole Prods., 87 NY2d 130, 134 [1995] [citation omitted]). But the bad faith rule advocated by the Morans, which derives from the McKenna decision, advances none of those objectives.

In McKenna, a short memorandum opinion, the Appellate Division held that an attorney’s disapproval pursuant to an attorney approval contingency “would terminate plaintiffs rights under the contract, unless said disapproval is occasioned by bad faith” (123 AD2d 517, 517 [1986] [citations omitted and emphasis added]). The court further stated,

“While the issue of ‘bad faith’ usually raises a question of fact precluding summary judgment, the uncontradicted proof demonstrates conclusively that defendant acted in bad faith by instructing his attorney to disapprove the contract. Defendant, by interfering and preventing his attorney from considering the contract, acted in bad faith and, therefore, the condition that the contract be approved by seller’s attorney must be deemed waived and the contract formed” (id. [citation omitted]).

Reading a bad faith exception into an attorney approval contingency would create—as the McKenna court itself recognized—a regime where “question[s] of fact precluding summary judgment” would “usually [be] raise[d]” by a disappointed would-be seller or buyer any time an attorney disapproved a real estate contract pursuant to an attorney approval contingency. In an area of law where clarity and predictability are particularly important, “this novel notion would be entirely dependent on the subjective equitable variations of different Judges and courts instead of the objective, reliable, predictable and relatively definitive rules” of plain-text contractual language (Ely-Cruikshank Co. v Bank of Montreal, 81 NY2d 399, 403 [1993]).

The circumstances of this case illustrate the chanciness inherent in a bad faith rule. The Erks’ attorney disapproved the contract for the sale of the Morans’ Clarence house in late 1995. The Erks soon bought a house in a different community, and continued on with their lives, relying on their attorney’s disapproval of a contract that declared that such disapproval rendered it “void.” Some three years after their last contact with the Morans, the Erks were served with the complaint in this breach-of-contract lawsuit. Now—10 years after their attorney disapproved the contract within a three-day disapproval period—the Erks are fighting a six-figure judgment for putatively breaching an unwritten covenant because of something Mrs. Erk may have said or neglected to say in a single conversation with her attorney.

Indeed, any inquiry into whether a particular attorney disapproval was motivated by bad faith will likely require factual examination of communications between the disapproving attorney and that attorney’s client (see e.g. McKenna, 123 AD2d at 517 [“defendant acted in bad faith by instructing his attorney to disapprove the contract” (emphasis added)]; Moran v Erk, 45 AD3d 1329 [2007] [“the evidence supports the court’s determination that defendants acted in bad faith by instructing their attorney to disapprove the contract” (emphasis added)]). That is, the disapproving attorney will be subpoenaed to testify about communications the disclosure of which might be detrimental to that attorney’s client—a direct conflict with an attorney’s duty to preserve a client’s confidences and secrets (see 22 NYCRR 1200.19 [a] [defining “secret” as “information gained in the professional relationship that the client has requested be held inviolate or the disclosure of which would be embarrassing or would be likely to be detrimental to the client”]). This is precisely what occurred here, where the lower courts’ findings of bad faith were expressly grounded in the deposition testimony of the Erks’ attorney. Moreover, the threat to attorney-client confidentiality under a bad faith regime could harm the attorney-client relationship itself in the context of real estate transactions. A diligent attorney, cognizant of the risk of being subpoenaed to testify as to the basis for a disapproval, would face a perverse incentive to avoid candid communications with his or her client regarding a transaction in which the attorney is supposed to represent the client’s legal interest.

All these potential problems vanish when an attorney approval contingency is interpreted according to its plain meaning, as our sister state of New Jersey has long done (see New Jersey State Bar Assn. v New Jersey Assn. of Realtor Bds., 186 NJ Super 391, 395, 452 A2d 1323, 1325 [1982] [approving “broad construction” of attorney approval clause “enabling an attorney to disapprove a contract or lease for any reason or reasons which would not be subject to review”], mod on other grounds and affd 93 NJ 470, 461 A2d 1112 [1983]). We therefore hold that where a real estate contract contains an attorney approval contingency providing that the contract is “subject to” or “contingent upon” attorney approval within a specified time period and no further limitations on approval appear in the contract’s language, an attorney for either party may timely disapprove the contract for any reason or for no stated reason. Since no explicit limitations were placed on the attorney approval contingency in the contract in this case, the Erks’ attorney’s timely disapproval was valid, and the contract is void by its express terms.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the complaint dismissed.

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

Order reversed, etc.

       The form contract, which is available electronically on the Bar Association’s Web site (see http://www.eriebar.org/pdfs/Contract.pdf [last accessed Nov. 17, 2008]), contains the subject attorney approval contingency as

        paragraph “ATC1” (see id. at 9). A boldface header to paragraph ATC1 provides:
      “ATTORNEY APPROVAL CONTINGENCY. CAUTION: The deletion or modification of Paragraph ATC1 (A) or Paragraph ATC1 (B), unless such modification extends the Attorney Approval Period or Addendum Approval Period, shall result in the automatic withdrawal of any bar association approval of this form” (id. at 9).


author: Read, J. Jones, J.

text:
    [900 NE2d 924, 872 NYS2d 373]
    The People of the State of New York, Respondent, v Jason Naradzay, Appellant.
    Argued October 15, 2008;
    decided November 24, 2008

      POINTS OF COUNSEL

      Stewart F. Hancock, Jr., Syracuse, and Hiscock Legal Aid Society (Gerald T. Barth of counsel) for appellant.
    I. Defendant’s convictions for attempted murder in the second degree should be reversed and those charges dismissed because there is insufficient proof, as a matter of law, that defendant—“with intent to commit” (Penal Law § 110.00) the crimes—engaged in conduct which tended “to effect commission of such” (id.) crimes. (People v Kassebaum, 95 NY2d 611; People v Trepanier, 84 AD2d 374; Feldman v Citibank, 110 Misc 2d 838; People v Bracey, 41 NY2d 296; People v Collins, 234 NY 355; People v Chandler, 250 AD2d 410; People v Mendez, 197 AD2d 485; People v Acosta, 80 NY2d 665; People v Mahboubian, 74 NY2d 174; United States v Desena, 287 F3d 170.) II. Defendant’s conviction for attempted burglary in the first degree should be reversed and that charge dismissed because there is insufficient proof, as a matter of law, that defendant—“with intent to commit” (Penal Law § 110.00) the crime—engaged in conduct which tended “to effect the commission of such crime” (id.) III. The trial court committed two reversible errors in denying defendant’s suppression motions: first, in not suppressing certain of defendant’s un-Mirandized statements made in custodial interrogation at the scene; and second, in using these un-Mirandized statements to create probable cause for defendant’s arrest, thus making the search of defendant’s person which produced the “to-do list” a search incident to a lawful surest. (People v Huffman, 41 NY2d 29; People v Stroman, 118 AD2d 1006, 68 NY2d 672; People v Rosen, 112 AD2d 253; People v O’Connor, 6 AD3d 738; People v Crowley, 98 AD2d 628; People v Bastian, 294 AD2d 882.) IV. The court’s errors in denying suppression of the unMirandized statements and the “to-do list” taken in an illegal search require a reversal and a grant of a new trial on all of defendant’s convictions.

      William J. Fitzpatrick, District Attorney, Syracuse (Victoria M. White and James P. Maxwell of counsel), for respondent.
    I. Defendant came dangerously close to bursting into the G. home and shooting his intended targets. (People v Gaimari, 176 NY 84; People v Villante, 204 AD2d 369, 84 NY2d 834; People v Garafolo, 44 AD2d 86; People v Williams, 84 NY2d 925; People v Thompson, 72 NY2d 410; People v Ford, 66 NY2d 428; People v Contes, 60 NY2d 620; People v Padilla, 181 AD2d 1051; People v Badia-Almonte, 161 AD2d 1199; People v Allen, 9 NY3d 1013; People v Rizzo, 246 NY 334.) II. The hearing court’s findings of fact and denial of suppression are supported by the hearing record. (People v Prochilo, 41 NY2d 759; People v Stokes, 212 AD2d 986, 86 NY2d 741; People v Williams, 202 AD2d 976, 83 NY2d 916; People v McLee, 249 AD2d 995, 92 NY2d 901; People v Allen, 9 NY3d 1013; People v Huffman, 41 NY2d 29; People v Bennett, 70 NY2d 891; People v Madore, 289 AD2d 986, 97 NY2d 757; People v Bigelow, 66 NY2d 417; People v Weintraub, 35 NY2d 351.)
   OPINION OF THE COURT

Read, J.

In late winter or early spring of 2003, D.G. was introduced to defendant Jason Naradzay by a mutual friend while on an out-of-town visit to a resort in the Thousand Islands with two of her girlfriends. D.G. and defendant occasionally talked with and met each other in the ensuing months. In particular, defendant sought D.G.’s assistance in polishing his resumé and making contacts in the Syracuse area, where he planned to relocate.

According to D.G., by August 2003 she had decided to sever ties with defendant because he was “appearing just a bit too needy and troublesome ... in his behavior.” She claims that she told defendant not to call her again, but he did, and she would relent and talk to him as “a listening ear.” She also encountered defendant in public more often than the odds of a chance meeting would seem to make plausible; for example, he turned up unexpectedly at a party that D.G. hosted for friends at an out-of-town restaurant near her summer home, and at her daughter’s soccer game at the Carrier Dome. On February 3, 2004, defendant called D.G., angrily complaining that she no longer made time for him. She responded that he was “now not giving [her] any choice” about continuing their friendship; she instructed him not to call her again. Defendant, for his part, denies that D.G. ever asked him to stop calling her.

Defendant acknowledges, however, that on or about February 4, 2004 he put together a “to-do” list memorializing a plan to break into D.G.’s home and to shoot D.G. and her husband in front of their three children. The list consisted of eight individually numbered steps; specifically, (1) “pick up 7:00,” (2) “travel 7:30,” (3) “arrive and park and load,” (4) “corner of property,” (5) “power enter (door knob + run + seek),” (6) “ID” (written above the crossed-out phrase “seek out”) 1, 2 and 3 (possibly a reference to D.G.’s three children) as well as the words “head, knees, back, hands,” (7) “make children look” and “living room,” and (8) “final shot!” Below this last item on the list, defendant wrote, among other things, “security,” “chest shots,” “children,” the names of D.G. and her husband, and various body parts. He linked D.G.’s name to “right foot” and “hands”; he linked her husband’s name to “knees” and “back.”

On February 4, 2004, defendant responded to a newspaper advertisement offering a Remington 20-gauge shotgun for sale. After having first asked the seller to deliver the gun to him on February 6th, defendant called him back to move their appointment up one day, to February 5th. Defendant also called a friend to confirm that she would, as previously arranged, be staying overnight at his Syracuse apartment on February 5th and that he could borrow her vehicle that evening, which defendant falsely told her he needed “to run some errands and . . . meet a friend for coffee.” Defendant concedes that he advanced his purchase of the shotgun by one day so as to have it available when he had access to the borrowed vehicle, enabling him to carry out the plan he had “concocted.”

The friend arrived at defendant’s apartment around 6:40 p.m. on February 5, 2004; the seller of the shotgun, a little later. Defendant lied to the seller that he was buying the shotgun as a gift for his father for skeet shooting, and that “since his father was an elderly gentleman [he] needed something with less of a kick to it.” Defendant wrote the seller a check in the amount of $575 (which the seller tried unsuccessfully to cash the next day) for the shotgun, 25 sabot slugs and a green safety key to lock the trigger. The seller described the shotgun as having a “fully rifled barrel that shoots only Sabot slugs,” and as “real accurate . . . zeroed for a hundred yards.”

Defendant then left his apartment at 7:10 p.m., again telling his friend that he needed to borrow her car to run errands and meet someone for coffee. Five minutes later, he returned to ask his friend about the key to the vehicle, because he had been unable to get the door to open. When she “asked him if he would like [her] to come down, maybe the lock had frozen,” he was “adamant about no, no no, it’s okay, I’ll get it and then he left.” About an hour later, at approximately 8:15 p.m., defendant again returned to his apartment. This time, he lied to his friend “that he had forgotten a library book that he had to return.” He “walked past [her] to the bookshelf and grabbed a book,” and she saw what “looked like a blanket or something wadded up under his left arm” as he left. Armed with the shotgun, defendant drove from Syracuse to Geddes, where D.G. and her family lived in a house on Cherry Road, at the junction of Cherry and Salisbury Roads.

Unsure of the exact location of D.G.’s house, defendant parked on Cherry Road south of her address and loaded the shotgun with four slugs—three in the magazine and one in the chamber. He got out of the vehicle with the shotgun in hand. As he walked north along Cherry Road, he concealed the shotgun inside his coat because “a thought came into [his] mind,” that he did not want to be seen with it. As defendant rounded the corner onto Salisbury Road, he realized that “power entry” was the next step on his “to-do” list. His idea was to “kick down the door.” According to defendant, he began to wonder if he could do that, but he “couldn’t go home.” He turned into a driveway on Salisbury Road. Defendant testified that he thought about shooting himself with the shotgun, and “it was the grace of God that [he] didn’t commit suicide or what [he] had planned.”

Between 9:00 p.m. and 9:30 p.m., a motorist pulled into the driveway of her 85-year-old mother’s house on Salisbury Road after a day of shopping and visiting. She “looked around the neighborhood and . . . saw a man walking up Salisbury Road and . . . made a mental note of it because two ladies going into the house in the dark is scary.” As she went around to the back of her car to remove some packages, she saw defendant cross over to the side of Salisbury Road where her mother’s house was located, and walk “down the driveway of [her] mother’s elderly neighbor.” She noticed him “scurr[ying] down the driveway,” which “caught [her] attention again for [her] mother’s and [her] safety.” She then saw defendant pull a shotgun from beneath his coat. He leaned the shotgun against the neighbor’s house and stood behind some tall shrubbery, seemingly trying to hide from her. Alarmed, the motorist “closed the back door of [her] car, got in the front door of [her] car, [and] told her mother [they] weren’t going home right away.” The motorist then drove the six blocks to her own house and immediately called 911.

The first deputy to respond to the motorist’s 911 call testified that he received the dispatch informing him of a “[s]uspicious person with a rifle or a weapon” at 9:30 p.m. He arrived at the scene within minutes, driving his patrol car down Salisbury Road in a westerly direction (towards Cherry Road) with his headlights off. He observed defendant standing on the north shoulder of Salisbury Road, just east of the driveway on D.G.’s property. The area was illuminated by a street light. Defendant approached the patrol car, and the deputy asked him if he was the complainant. Defendant responded, “I’m not the complainant, but I have a complaint to report. I have mental problems.”

The deputy got out of his patrol car and asked defendant if he had any weapons. Defendant pointed towards a shotgun placed next to a snowbank, about 20 feet from D.G.’s house and closer to the driveway where her van and two other cars were parked. The snowbank was on the shoulder of the road, abutting a wooden fence on D.G.’s property. After defendant admitted that the shotgun was loaded, the deputy placed him in handcuffs. A second sheriffs deputy soon arrived, and secured the loaded shotgun. This deputy testified that he received the dispatch at 9:30 or 9:35 p.m. and was at the scene within three minutes.

The two deputies were soon joined by two town police officers who assisted with frisking and questioning defendant. When asked what he was doing in the area, defendant responded by saying, “[T]hat bitch ruined my life.” When asked whom he was referring to, defendant named D.G. and provided her address. Meanwhile, one of the deputies retrieved 21 sabot slugs and the green safety key from defendant’s coat pockets. One of the police officers found a folded piece of paper in the pocket of defendant’s suit jacket. In response to the officer’s question, defendant identified the paper as a “to-do” list.

A grand jury indicted defendant for attempted murder in the second degree, attempted burglary in the first degree and criminal possession of a weapon in the fourth degree. Following a hearing at which Supreme Court denied defendant’s motion to suppress the “to-do” list and certain of his statements to police, the case proceeded to trial. At trial, defendant, who has been diagnosed with bipolar disorder, contended that he was not responsible for his acts by reason of mental disease or defect. He also protested at trial that he “[n]ever wanted to take a life,” while acknowledging that he intended to open fire on D.G. and her husband with a shotgun in the confines of their home.

The jury convicted defendant of all charges. The trial judge, taking into account defendant’s history of mental illness, sentenced him to concurrent terms aggregating 15 years’ imprisonment plus five years of postrelease supervision. The Appellate Division subsequently affirmed, with one Justice dissenting, who granted defendant leave to appeal (50 AD3d 1489 [2008]). We now affirm.

Defendant primarily challenges the legal sufficiency of the proof supporting his attempted burglary and murder convictions, arguing that his intent was equivocal and that his actions prior to the arrival of the first deputy did not come “dangerously near” commission of burglary and murder. Viewing the evidence in the light most favorable to the People (see People v Danielson, 9 NY3d 342, 349 [2007]), we disagree.

A defendant is guilty of attempt “when, with intent to commit a crime, he [or she] engages in conduct which tends to effect the commission of such crime” (Penal Law § 110.00). In order to constitute an attempt, the defendant’s “conduct must have passed the stage of mere intent or mere preparation to commit a crime” (People v Mahboubian, 74 NY2d 174, 189 [1989]). In other words, the defendant must have “engaged in conduct that came ‘dangerously near’ commission of the completed crime” (People v Kassebaum, 95 NY2d 611, 618 [2001], quoting People v Acosta, 80 NY2d 665, 670 [1993]). The “dangerously near” standard does not, however, mandate that the defendant take “the final step necessary” to complete the offense (Mahboubian, 74 NY2d at 190; see People v Bracey, 41 NY2d 296, 300 [1977]).

Defendant contends that his intent wavered on the night of his arrest, as evidenced by his thoughts of suicide and his placement of the shotgun on the shoulder of the road next to the snowbank. A rational jury could reasonably infer, however, that defendant intended to commit burglary and murder from his “conduct and the surrounding circumstances” (Bracey, 41 NY2d at 301 [internal quotation marks and citation omitted]). On the evening of his arrest, in accordance with his “to-do” list, defendant borrowed a vehicle, obtained a shotgun and ammunition and drove several miles to the immediate vicinity of D.G.’s house. There was evidence that, in the few minutes that elapsed between the motorist’s 911 call and the arrival of the first deputy, defendant emerged from the shrubbery beside a house on Salisbury Road and brought his loaded shotgun within 20 feet of D.G.’s house. Although, after the fact, defendant claimed that his plan evolved from murder (or murder-suicide) to suicide only, the jury was entitled to discredit that self-serving testimony.

Defendant also argues that his conduct never came “dangerously near” burglary and murder. He emphasizes that the first deputy on the scene found him “just standing” in the street and that he had not yet picked up the shotgun, walked onto D.G.’s property or tried to enter her home. But a rational jury could conclude that defendant crossed “the boundary where preparation ripens into punishable conduct,” a determination that “depends greatly on the facts of the particular case” (Mahboubian, 74 NY2d at 190). Defendant’s actions can be characterized as “potentially and immediately dangerous” (id. at 191): he filled his pockets with 25 sabot slugs, loaded a shotgun capable of hitting a target accurately at a distance of 100 yards with four of these slugs, including one in the chamber, and stood mere steps away from the property of his intended victims, thereby “placing it in [his] power to commit the offense unless interrupted” (id. [internal quotation marks and citation omitted]).

As we have “explicitly recognized” in previous decisions, “there comes a point where it is ‘too late in the stage of preparation for the law to conclude that no attempt occurred’ ” (id. at 192, quoting People v Mirenda, 23 NY2d 439, 446 [1969]). Although defendant seemed to claim that he put the shotgun aside and “meander[ed]” in the cold aimlessly for half an hour before the first deputy arrived, this is inconsistent with the motorist’s and the deputies’ testimony. They indicated that much less than half an hour elapsed between the time the motorist first spotted defendant propping the shotgun up against her mother’s neighbor’s house and the first deputy’s arrival on the scene. There was evidence that defendant moved the shotgun closer to D.G.’s house—placing it on the shoulder of the road bordering her property—during this interval. In short, the jury might have reasonably concluded that there was no homicide here only because an observant motorist made a 911 call and law enforcement authorities responded promptly, cornering defendant before he could burst into D.G.’s house, armed with a shotgun, the next step on his “to-do” list.

Finally, we reject defendant’s argument that certain evidence was obtained in violation of his Miranda rights and should have been suppressed. Whether the police have engaged in custodial interrogation is a mixed question of law and fact (see People v Paulman, 5 NY3d 122, 129 [2005]). Here, record evidence supports the Appellate Division’s conclusion that the police engaged in threshold questioning designed to clarify the situation—not interrogation—while frisking defendant.

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

Jones, J.

(dissenting in part). I join the majority insofar as affirming the conviction for criminal possession of a weapon in the fourth degree. However, because the conduct of defendant did not, in my view, reach the point at which it would be punishable under the law of attempt, I respectfully dissent. As the majority correctly notes, to be guilty of attempted commission of a crime, a defendant must have (1) the specific intent to commit a crime and (2) conduct which comes “dangerously close” to the accomplishment of the crime—mere preparation is not enough (see People v Bracey, 41 NY2d 296, 300 [1977]). These requirements correspond to the mens rea and actus reus elements, both of which need to be established in order for a defendant to be guilty of attempt.

Here, there is no question that defendant’s meticulous planning, post-arrest statements, and “to-do” list showed his intent to commit the crime of murder. However, intent by itself—no matter how loathsome—is not sufficient to establish criminal liability for attempt. As the dissent below aptly noted, “[t]he law does not punish evil thoughts” (50 AD3d 1489, 1492 [2008], quoting People v Bracey, 41 NY2d at 300, citing People v Sullivan, 173 NY 122, 133 [1903]). Even preliminary steps taken in furtherance of a criminal scheme, coupled with the requisite intent, would not constitute an attempt if those steps did not come dangerously near completion of the crime (see e.g. People v Rizzo, 246 NY 334, 339 [1927]; People v Sullivan, 173 NY at 135-136).

As for the necessary actus reus element in this case, defendant merely carried out the initial steps in his “to-do” list and was never “dangerously near” completion of the crime. The evidence showed that at the time defendant approached the police admitting his mental problems and his possession of a shotgun, he was 25 to 30 feet from the border of the victims’ property and his weapon was 5 to 10 feet away from him. Defendant never approached the house—no footprints were found in the snowy lawn—and never saw or came close to his intended victims—in fact, one intended victim was not even in the area at that time (see People v Rizzo, 246 NY 334 [1927]). It is also unclear whether defendant identified the correct house; after creeping through the neighborhood unsure of the exact location of the victims’ house, defendant laid his shotgun down on a neighbor’s lawn and paced in front of that neighbor’s house. Under these circumstances, defendant’s conduct did not satisfy the dangerous proximity standard (i.e., his conduct had not gone “to the extent of placing it in [his] power to commit the offense unless interrupted” [People v Mahboubian, 74 NY2d 174, 191 (1989)]).

Moreover, in the minutes that elapsed between the neighbor’s call to the police and the arrival of the sheriffs deputy, defendant had ample time to charge into the residence and execute his plan; but he did not. While defendant’s act need not be “the final one towards the completion of the offense” (id. at 190), defendant did not “pass[ ] that point where most [people], holding such an intention as defendant. . . , would think better of their conduct and desist” (id. at 191). Indeed, rather than proceeding with his plan, defendant disarmed himself and, upon the arrival of the police, surrendered to them. Although defendant’s intent and plans were malevolent, his conduct was at best equivocal and this is insufficient to support a conviction of attempted murder and attempted burglary under these facts.

Chief Judge Kaye and Judges Graffeo, Smith and Pigott concur with Judge Read; Judge Jones dissents in part in a separate opinion in which Judge Ciparick concurs.

Order affirmed.

      . A sabot is a thrust-transmitting sheathing that positions a slug in the gun’s barrel and prevents the escape of gas ahead of the slug, thereby improving accuracy (see Merriam-Webster’s Collegiate Dictionary 1028 [10th ed 1996]).

      . In an affidavit executed the night of the incident, the motorist said that she arrived at her mother’s house “at about 9:20 p.m.”