text:
    [801 NE2d 404, 769 NYS2d 184]
    Christine A. Jeffreys, Appellant, v Patrick H. Griffin, Respondent.
    Argued September 18, 2003;
    decided October 30, 2003

      POINTS OF COUNSEL

      Barry S. Gedan, Riverdale, for appellant.
    I. The Bronx County Supreme Court and the Appellate Division majority misapprehended the import of the Court of Appeals’ decision in David v Biondo (92 NY2d 318 [1998]). (DeWitt v Hall, 19 NY2d 141; Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65; Finkelstein v Cornell Univ. Med. Coll., 269 AD2d 114; Johnson v Oval Pharm., 165 AD2d 587; Reed v State of New York, 78 NY2d 1.) II. Factual findings of administrative agencies, made after quasi-judicial hearings, are routinely accorded collateral estoppel effect. (Ryan v New York Tel. Co., 62 NY2d 494; Sheppard v Blitman/Atlas Bldg. Corp., 288 AD2d 33; Dailey v Tofel, Berelson, Saxl & Partners, 273 AD2d 341; Matter of Metro-North Commuter R.R. Co. v New York State Exec. Dept. Div. of Human Rights, 271 AD2d 256; Lee v Jones, 230 AD2d 435, 91 NY2d 802; Rosa v Quarry Crotona Homes, 239 AD2d 273; Vogel v Herk El. Co., 229 AD2d 331; Wehringer v Brannigan, 232 AD2d 206, 89 NY2d 980, 1087; Matter of Camperlengo v Barell, 78 NY2d 674; Matter of Choi v State of New York, 74 NY2d 933.) III. Former Doctor Griffin had a full and fair opportunity to contest the quasi-judicial hearing before the Board for Professional Medical Conduct Hearing Committee, which found squarely against him upon the identical issue raised in the summary judgment motion. (Lee v Jones, 230 AD2d 435; Bastein v Sotto, 299 AD2d 432; Messina v Matarasso, 284 AD2d 32; Tower Ins. Co. of N.Y. v Old N. Blvd. Rest. Corp., 245 AD2d 241; Rice v Massalone, 160 AD2d 861; A to Z Assoc. v Cooper, 161 Misc 2d 283, 215 AD2d 161.) IV Under the current state of the law, Stevenson v Goomar (148 AD2d 217 [1989]) has lost its precedential value. (Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147; Gilberg v Barbieri, 53 NY2d 285; Rosa v Quarry Crotona Homes, 239 AD2d 273; Vogel v Herk El. Co., 229 AD2d 331; Wehringer v Brannigan, 232 AD2d 206; A to Z Assoc. v Cooper, 161 Misc 2d 283, 215 AD2d 161; Parklane Hosiery Co. v Shore, 439 US 322; Clemens v Apple, 65 NY2d 746; Parker v Blauvelt Volunteer Fire Co., 93 NY2d 343; Sanchez v Orozco, 178 AD2d 391.) V The holding of the Appellate Division majority, if broadly read, represents a substantial change in the law governing application of collateral estoppel to administrative adjudications, and, if simply representing a narrowly carved exemption, intrudes upon the legislative function. (Horn v New York Times, 100 NY2d 85; Wieder v Skala, 80 NY2d 628.) VI. It is constitutionally impermissible to insulate physicians from collateral estoppel, or to bar that doctrine’s use by victims of physicians’ sexual assaults. (Stevenson v Goomar, 148 AD2d 217; Bush v Gore, 531 US 98; Hulin v Fibreboard Corp., 178 F3d 316; Le Grand v Evan, 702 F2d 415; Matter of Benjamin L., 92 NY2d 660; People v Koertge, 182 Misc 2d 183; Schwartz v Durning, 104 Misc 2d 1018; Judo, Inc. v Peet, 68 Misc 2d 281; Clark v Jeter, 486 US 456; Adsani v Miller, 139 F3d 67, 525 US 875.) VII. The Board for Professional Medical Conduct adjudication, supported by findings independent of the reversed criminal conviction, cannot be collaterally attacked on this appeal. (Cahill v Harter, 277 AD2d 655; Allied Chem. v Niagara Mohawk Power Corp., 129 AD2d 233, 72 NY2d 271, 488 US 1005; Gild v Fried, 298 AD2d 275; Matter of Joseph v Roldan, 289 AD2d 243; Stone v Goldberg, 215 AD2d 180; Stevenson v Goomar, 148 AD2d 217; Ta-Chotani v Doubleclick, Inc., 276 AD2d 313.)

      Michael C. Marcus, New York City, for respondent.
    I. This appeal should be dismissed since matters of fact and the exercise of discretion were inextricably woven into the determination appealed from. (Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147; Patrician Plastic Corp. v Bernadel Realty Corp., 25 NY2d 599; Rosemont Enters. v Irving, 41 NY2d 829.) II. The offensive use of collateral estoppel to establish civil tort liability under the particular circumstances of this case contravenes the concept of fairness underlying the collateral estoppel doctrine. (Ryan v New York Tel. Co., 62 NY2d 494; Sheppard v Blitman/Atlas Bldg. Corp., 288 AD2d 33; A to Z Assoc. v Cooper, 161 Misc 2d 283, 215 AD2d 161; David v Biondo, 92 NY2d 318; Stevenson v Goomar, 148 AD2d 217; D’Arata v New York Cent. Mut. Fire Ins. Co., 76 NY2d 659; Gramatan Home Invs. Corp. v Lopez, 46 NY2d 481; Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147; Schwartz v Public Adm’r of County of Bronx,
      24 NY2d 65.) III. The equitable principles addressed by the Court of Appeals in David v Biondo (92 NY2d 318 [1998]) are not limited to the privity analysis therein. IV The First Department’s majority opinion does not intrude on a legislative function. (Horn v New York Times, 100 NY2d 85; Wieder v Skala, 80 NY2d 628.) V There are no viable constitutional issues. VI. The inference that the Board for Professional Medical Conduct’s factual finding was influenced by the criminal conviction was correctly considered by the Appellate Division. (Chateau D'If Corp. v City of New York, 219 AD2d 205, 88 NY2d 811; Caldwell v 302 Convent Ave. Hous. Dev. Fund Corp., 272 AD2d 112.)

      Donald R. Moy, Lake Success, for Medical Society of the State of New York, amicus curiae.
    The application of collateral estoppel against defendant-respondent would not comport with fundamental fairness. (Staatsburg Water Co. v Staatsburg Fire Dist., 72 NY2d 147; Gilberg v Barbieri, 53 NY2d 285; Stevenson v Goomar, 148 AD2d 217, 74 NY2d 945; David v Biondo, 92 NY2d 318.)
   OPINION OF THE COURT

Read, J.

This appeal calls upon us to decide whether a finding of sexual misconduct by a Hearing Committee of the New York State Department of Health’s Board for Professional Medical Conduct precludes defendant physician from contesting liability for assault and battery in plaintiff patient’s civil action to recover money damages. In light of the circumstances of this case and the flexible nature of the doctrine of collateral estoppel, we conclude that it does not.

I.

In December 1991, plaintiff Christine A. Jeffreys began treatment with defendant Dr. Patrick H. Griffin, a gastroenterologist, for stomach problems and depression, for which defendant prescribed antidepressants. Plaintiff had been evicted from her apartment in July 1991, and she blamed her ailments on stress caused by her landlord’s supposedly oppressive conduct.

On January 13, 1995, plaintiff underwent a colonoscopy and an upper endoscopy, both of which require sedation, at defendant’s office. She subsequently reported to the police that defendant had orally sodomized her at some point during the upper endoscopy. Law enforcement authorities supplied plaintiff with a tape recorder, which she secretly wore when she visited defendant’s office on April 27, 1995, ostensibly for medical follow-up. The tape recording captured defendant repeatedly denying the sodomy, but stating that he had kissed plaintiff immediately before or after performing the upper endoscopy. Defendant later prepared an exculpatory chart entry documenting plaintiffs April 27th office visit.

Civil, criminal and administrative proceedings, all stemming from plaintiffs allegations of oral sodomy, quickly ensued. First, in October 1995, plaintiff commenced this civil action against defendant, alleging assault and battery and intentional infliction of emotional distress. Then on January 19, 1996, defendant was indicted on charges of first-degree sodomy, sexual abuse in the first degree and falsifying business records in the first degree. Finally, in March 1996, the New York State Department of Health’s Board for Professional Medical Conduct brought disciplinary charges against defendant. Administrative hearings were held before a Hearing Committee of the Board on April 24, May 2 and 29, June 10, 13 and 27 and July 17 and 18, 1996.

Defendant’s criminal trial also took place in the spring of 1996, and, on June 18, 1996, he was convicted by a jury of the crimes of first-degree sodomy and falsifying business records in the first degree. On September 6, 1996, defendant was sentenced to 3Vs to 10 years in prison. On October 24, 1996, with knowledge of defendant’s recent criminal conviction and sentencing, the Hearing Committee issued its determination and order revoking defendant’s license to practice medicine. Two of the three Committee members found, by a preponderance of the evidence (see Public Health Law § 230 [10] [f]), that defendant had performed oral sex on plaintiff without her consent, and therefore had engaged in professional misconduct. All three resolved that defendant had engaged in professional misconduct by entering a false business record relating to plaintiffs office visit on April 27, 1995.

In April 1997, Supreme Court granted plaintiffs motion for summary judgment on liability in her cause of action for assault and battery, based solely on defendant’s criminal conviction. After the Appellate Division, with two Justices dissenting, reversed his criminal conviction in April 1998 (242 AD2d 70 [1st Dept 1998], appeal dismissed, 93 NY2d 955 [1999]), defendant moved to vacate this order. In December 1998, Supreme Court granted defendant’s motion and vacated its prior order. Relying on our decision in David v Biondo (92 NY2d 318 [1998]), Supreme Court held that the Committee’s adverse factual determination did not preclude defendant from contesting his liability for assault and battery in plaintiffs civil action.

Defendant was subsequently retried and, in April 2000, a jury acquitted him of all charges. Then in October 2002, the Appellate Division, with one Justice dissenting, affirmed Supreme Court’s order in plaintiffs civil action (301 AD2d 232 [1st Dept 2002]). In explaining its decision, the majority adverted to “[t]he crucial point . . . that notwithstanding the charges made and evidence proffered on retrial, defendant was acquitted of all criminal charges” (id. at 233). The Appellate Division subsequently certified the following question to us: “Was the order of [the Appellate Division], which affirmed the order of the Supreme Court, properly made?”

II.

Collateral estoppel, or issue preclusion, gives conclusive effect to an administrative agency’s quasi-judicial determination when two basic conditions are met: (1) the issue sought to be precluded is identical to a material issue necessarily decided by the administrative agency in a prior proceeding; and (2) there was a full and fair opportunity to contest this issue in the administrative tribunal (see Ryan v New York Tel. Co., 62 NY2d 494 [1984]; see also Schwartz v Public Adm’r of County of Bronx, 24 NY2d 65 [1969]). The proponent of collateral estoppel must show identity of the issue, while the opponent must demonstrate the absence of a full and fair opportunity to litigate. In three decisions handed down on the same day in 1988, we explored the boundaries of these basic conditions in three different kinds of administrative proceedings.

First, in Staatsburg Water Co. v Staatsburg Fire Dist. (72 NY2d 147 [1988]), plaintiff water company sought to use a determination by the Public Service Commission (PSC) to preclude the defendant from litigating its liability in the plaintiffs suit seeking back payment for services rendered. At the plaintiffs request, the PSC issued a decision which found, in essence, that plaintiff water company was entitled to payment from the defendant. We found collateral estoppel inapplicable because plaintiff water company initiated the PSC decision, the defendant was not a party to the proceeding and the PSC had no power to compel the defendant to take any action as a result of its determination. In light of this absence of immediate consequences for the defendant, we concluded that the PSC’s decision was an advisory opinion, which the defendant lacked a full and fair opportunity to contest.

Importantly, we also noted in Staatsburg that collateral estoppel is a flexible doctrine, such that

“[i]n the end, the fundamental inquiry is whether relitigation should be permitted in a particular case in light of what are often competing policy considerations, including fairness to the parties, conservation of the resources of the court and the litigants, and the societal interests in consistent and accurate results” (id. at 153 [citations omitted]).

Second, in Allied Chem. v Niagara Mohawk Power Corp. (72 NY2d 271 [1988]), we concluded that the party against whom collateral estoppel was sought had indeed enjoyed a full and fair opportunity to contest the issue before the PSC. There, Niagara Mohawk had filed a petition with the PSC and Allied Chemical had filed a counterpetition and complaint. The PSC ruled in Niagara Mohawk’s favor, and Allied Chemical chose to file the action in Supreme Court rather than contest the PSC’s determination in a CPLR article 78 proceeding. When Niagara Mohawk moved to dismiss the action based on the PSC’s prior determination and the PSC, added as a party at the trial court’s behest, moved for summary judgment on the same grounds, Supreme Court granted the motions.

We affirmed, holding that collateral estoppel properly barred Allied Chemical’s action. In so doing, we again stressed the need to assess whether issue preclusion is fair in view of the realities in the particular administrative setting:

“While issue preclusion may arise from the determinations of administrative agencies, in that context the doctrine is applied more flexibly, and additional factors must be considered by the court. These additional requirements are often summed up in the beguilingly simple prerequisite that the administrative decision be ‘quasi-judicial’ in character” (id. at 276 [citations omitted]).

We noted that among the factors bearing on whether an administrative decision is “quasi-judicial” are “whether the procedures used in the administrative proceeding . . . were sufficient both quantitatively and qualitatively, so as to permit confidence that the facts asserted were adequately tested, and that the issue was fully aired” (id. at 276-277).

Third, Matter of Halyalkar v Board of Regents of State of N.Y. (72 NY2d 261 [1988]) called upon us to decide whether the State Board of Regents, which prior to 1991 shared responsibility for physician discipline with the Department of Health, might find a physician guilty of willfully and knowingly filing false medical reports solely on the basis of a consent order negotiated by the physician with the New Jersey Board of Medical Examiners. We recognized that in light of the consent order, the issues were never litigated in New Jersey, and without litigation there could be no identity of issues. Further, whether to apply collateral estoppel in a particular case depends upon “general notions of fairness involving a practical inquiry into the realities of the litigation” (id. at 268; see also Gilberg v Barbieri, 53 NY2d 285, 291-292 [1981]; People v Roselle, 84 NY2d 350, 357 [1994] [“(C)ollateral estoppel, a flexible doctrine, should not be mechanically applied just because some of its formal prerequisites, like identity of parties, identity of issues, a final and valid prior judgment and a full and fair opportunity to litigate the prior determination, may be present”]).

III.

Applying the foregoing principles and precedents to these facts, we look first at whether plaintiff established the identity of a material issue necessarily decided by the administrative tribunal, and conclude that she did. She limited the relevant cause of action to assault and battery and did not, for example, also include a malpractice claim. The Hearing Committee specifically found that plaintiff awakened at some point after defendant had commenced the upper endoscopy and discovered him “administering oral sex” to her without her consent; therefore, identity of issue exists.

Next, the Board for Professional Medical Conduct’s disciplinary hearings are among the most procedurally rigorous administrative proceedings in New York State (see Public Health Law § 230). These proceedings are “quasi-judicial” in the general sense required for application of the doctrine of collateral estoppel. This is so notwithstanding the differences between these proceedings and a civil trial, which were pointed out by the Appellate Division: the absence of juries, the absence of CPLR article 31 disclosure and the inapplicability of the rules of evidence followed in a civil trial. Moreover, as the dissenting Justice at the Appellate Division noted, a physician’s very livelihood— the continued ability to practice medicine—is at risk of loss in the Board for Professional Medical Conduct’s disciplinary proceedings. These stakes provide considerable incentive for the physician to litigate issues fully in this forum.

Further, David v Biondo does not foreclose a plaintiff from invoking collateral estoppel when a Hearing Committee disciplines a physician. Rather, a physician cannot interpose an exculpatory finding as a shield in a subsequent civil action. This is so because the plaintiff in the civil action is not a “legally recognized party in interest” in the Hearing Committee’s proceeding, and “enjoy[s] no legal or practical opportunity to litigate . . . civil law grievances within the framework of the [Hearing Committee’s] proceeding” (92 NY2d at 321). In effect, a plaintiff cannot be said to have lost when a physician achieves a favorable result in the Hearing Committee’s proceeding because the plaintiff never had a day in court. Contrariwise, when the physician loses in the Hearing Committee, assuming a full and fair opportunity to contest the identical issue, the physician has, indeed, had a day in court. Moreover, in David we were troubled by an additional factor not present when the physician loses before the Hearing Committee: the prospect that patients might refrain from reporting professional misconduct to the Office of Professional Discipline if, by so doing, they risked foreclosure of their civil actions for money damages.

Nonetheless, we conclude that the Appellate Division properly declined to apply the doctrine of collateral estoppel here in light of “the realities of the litigation” of this case, regardless of whether the formal prerequisites for collateral estoppel were present. When the Hearing Committee’s members voted to revoke defendant’s license, they were considering whether a recently convicted and sentenced sex offender should be allowed to practice medicine. Defendant’s conviction was subsequently reversed and, importantly, on retrial he was acquitted of all the criminal charges stemming from plaintiffs allegations. There is no way to disentangle the Hearing Committee members’ nonunanimous determination of sexual misconduct from their contemporaneous awareness of the outcome of defendant’s first criminal trial. Because defendant was later acquitted after retrial, he should not be precluded from contesting liability for assault and battery in plaintiffs civil action.

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

Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt and Graffeo concur.

Order affirmed, etc.

      . According to his attorney, defendant later denied kissing plaintiff, testifying that he had made this story up in his panic to persuade her that, because of the effects of the drugs administered during the colonoscopy and upper endoscopy, her memory was seriously faulty.

      . The Pattern Jury Instructions provide that “[a] person who intentionally touches another person, without that person’s consent, and causes an offensive bodily contact commits a battery and is liable for all damages resulting from (his, her) act. Intent involves the state of mind with which an act is done. The intent required for battery is intent to cause a bodily contact that a reasonable person would find offensive. An offensive bodily contact is one that is done for the purpose of harming another or one that offends a reasonable sense of personal dignity, or one that is otherwise wrongful” (PJI2d 3:3 [2003]). Assault involves putting a person in fear of a battery (see PJI2d 3:2 [2003]).

      . Plaintiff objects that the two majority members of the Hearing Committee expressly noted that “the outcome of [defendant’s] criminal appeal would have no effect on the revocation of [defendant’s] license” because the findings on those specifications unrelated to his criminal conviction were sufficient to warrant license revocation. Plaintiff also protests that defendant did not attack the validity of the Hearing Committee’s factual determination in Supreme Court on the basis that his criminal conviction may have tainted the Committee’s deliberations. The key consideration here, however, is not the outcome of defendant’s criminal appeal alone, but his subsequent acquittal after retrial. The acquittal, which occurred after Supreme Court rendered its decision, was specifically cited by the Appellate Division majority as a basis for its decision, as were the Hearing Committee’s split vote and the handing down of its decision shortly after defendant’s sentencing.


source: Caselaw Access Project

author: Chief Judge Kaye. G.B. Smith, J.

license: Public Domain

text:
    [801 NE2d 376, 769 NYS2d 156]
    The People of the State of New York, Respondent, v Segundo Jose Velasquez, Appellant. The People of the State of New York, Respondent, v Ronald Foster, Appellant.
    Argued September 17, 2003;
    decided October 23, 2003

      POINTS OF COUNSEL

      Denise A. Cors, New York City, and Lynn W.L. Fahey for appellant in the first above-entitled action.
    Appellant did not knowingly, intelligently and voluntarily waive his right to be present at voir dire sidebars when the court merely announced, in his presence, “Antommarchi waived.” (People v Antommarchi, 80 NY2d 247; People v Davidson, 89 NY2d 881; People v Morris, 217 AD2d 561; People v Golden, 222 AD2d 696; People v Marzug, 270 AD2d 945; People v Roman, 88 NY2d 18; People v Mitchell, 80 NY2d 519; People v Sloan, 79 NY2d 386; People v Williams, 92 NY2d 993; People v Vargas, 88 NY2d 363.)

      Charles J. Hynes, District Attorney, Brooklyn (Phyllis Mintz and Leonard Johlove of counsel), for respondent in the first above-entitled action.
    Defense counsel validly waived defendant’s right to be present at sidebar conferences during voir dire. However, if this Court deems the record inadequate to support that conclusion, then the proper remedy would be to remand the case for a reconstruction hearing. (Snyder v Massachusetts, 291 US 97; People v Mitchell, 80 NY2d 519; People v Maher, 89 NY2d 318; People v Roman, 88 NY2d 18; People v Sprowal, 84 NY2d 113; People v Antommarchi, 80 NY2d 247; People v Kinchen, 60 NY2d 772; People v Vargas, 88 NY2d 363; People v Santorelli, 95 NY2d 412; People v Lebrón, 293 AD2d 689.)

      Office of the Appellate Defender, New York City (Melissa Roth-stein, Richard M. Greenberg and Daniel A. Warshawsky of counsel), for appellant in the second above-entitled action.
    Defendant is entitled to a new trial because the record establishes that he was excluded from bias-related robing room discussions with prospective jurors. (People v Maher, 89 NY2d 318; People v Antommarchi, 80 NY2d 247; People v Camacho, 90 NY2d 558; People v Roman, 88 NY2d 18; People v Davidson, 210 AD2d 76, 89 NY2d 881; People v Madera, 216 AD2d 89; People v Michalek, 82 NY2d 906.)

      Robert T Johnson, District Attorney, Bronx (Andrew N. Sacher, Joseph N. Ferdenzi and Karen Swiger of counsel), for respondent in the second above-entitled action.
    Defendant fails to present an adequate record for review. Alternatively, the factual finding of the court below that defendant was present for the relevant robing room discussion with venirepersons is supported by the record and therefore beyond the scope of this Court’s review power. (People v Maher, 89 NY2d 318; People v Antommarchi, 80 NY2d 247; People v Sloan, 79 NY2d 386; People v Childs, 247 AD2d 319; People v Roman, 88 NY2d 18; People v Davidson, 89 NY2d 881; People v Olivo, 52 NY2d 309; People v Charleston, 54 NY2d 622; People v Kinchen, 60 NY2d 772; People v Dokes, 79 NY2d 656.)
   OPINION OF THE COURT

Chief Judge Kaye.

In these appeals, we are asked to determine whether the right of defendants to be present at sidebar conferences with prospective jurors was violated. In each case, we conclude that it was not.

During jury selection in defendant Foster’s robbery trial, as the record indicates, the court on February 4, 1999, informed prospective jurors that at the conclusion of its remarks, “I will step into the robing room with the attorneys and anyone who feels that I have raised an issue that they need to discuss with us will be invited to come in one at a time and tell us about it. . . . No one will be asked to make any public statements.” The court then invited “counsel” into the robing room, where a number of jurors were questioned about their ability to be fair and impartial. The transcript of the robing room conference does not make particular note of defendant’s presence or absence, or anyone else’s. Presence was noted only as a person spoke, and at this conference there is no indication that defendant said anything.

Defendant Velasquez was tried for depraved indifference murder and possession of a weapon. The transcript reflects that on April 17, 2000, following a bench conference held after the conclusion of the Sandoval hearing, the court stated on the record, “Okay. Bring in the jury, please. Come up, counsel. While the jury is coming in, let’s talk about logistics.” At the close of another off-the-record bench conference, defense counsel announced in open court, “Waived,” to which the court responded, “Antommarchi waived.” During jury selection, a prospective juror—ultimately seated as the foreperson—was questioned about bias at a sidebar conference outside the presence of defendant.

Each defendant claims that the transcript of his trial establishes a violation of his right to be present during the questioning of prospective jurors. The Appellate Division affirmed both convictions, with two Justices dissenting in Velasquez. We also affirm.

GPL 260.20 provides that a defendant must be personally present during the trial of an indictment. This statutory right extends to all material stages of the trial, including ancillary proceedings in which defendants’ presence could have “a substantial effect on their ability to defend against the charges” (People v Sloan, 79 NY2d 386, 392 [1992]). Defendants thus have a right to be present at sidebar and robing room conferences with prospective jurors regarding possible bias or hostility because they may give counsel input “in making discretionary choices during jury selection, based on impressions gained from seeing and hearing the juror’s responses on voir dire” (People v Roman, 88 NY2d 18, 26 [1996]; see also People v Antommarchi, 80 NY2d 247 [1992]).

Although the right to be present at sidebar questioning need not be preserved by objection (see Antommarchi, 80 NY2d at 250; People v Dokes, 79 NY2d 656, 662 [1992]), a defendant alleging an Antommarchi violation must nevertheless present an adequate record for appellate review (see People v Kinchen, 60 NY2d 772 [1983]). Moreover, although the right is fundamental, it may be waived (see People v Vargas, 88 NY2d 363, 375-376 [1996]).

People v Foster

A presumption of regularity attaches to judicial proceedings (see People v Harrison, 85 NY2d 794, 796 [1995]). This presumption may be overcome only by substantial evidence (see People v Richetti, 302 NY 290, 298 [1951]; People v Harris, 61 NY2d 9, 16 [1983]).

Defendant Foster has failed to meet his burden of coming forward with substantial evidence establishing his absence. We decline to speculate that the court reporter’s failure to note defendant’s presence at the challenged robing room conference, coupled with occasional references to his presence in other portions of the transcript, demonstrates that he must have been absent from the ancillary proceeding at issue. Without more, failure to record a defendant’s presence is insufficient to meet the defendant’s burden of rebutting the presumption of regularity.

Nor is defendant’s absence established by the trial court’s failure to apprise the prospective jurors that defendant would be present with the attorneys in the robing room. The court’s assurance that “[n]o one will be asked to make any public statements” was indicative merely of its intention that the jurors would not be forced to discuss personal matters in open court, and did not reflect a promise that no one other than the court and the attorneys would be present in the room. Indeed, defendant concedes that the court clerk and court reporter were present in the robing room, even though the court had not informed the jurors that they, too, would be there. And as with defendant, the presence of the court clerk is not noted in the transcript. Moreover, on at least one other occasion in which the trial court told the jurors that it was going to confer with “counsel” without also mentioning the defendant, it is beyond dispute that defendant, who spoke on the record, was in fact present.

Because defendant has failed to provide substantial record evidence of his absence, a reconstruction hearing is not required. Reconstruction hearings may be appropriate where it is clear that a proceeding took place that was not transcribed (see e.g. People v Michalek, 82 NY2d 906 [1994] [reconstruction hearing ordered where Sandoval hearing held but not transcribed]); the trial court refused to record the proceedings (see e.g. People v Davidson, 89 NY2d 881 [1996] [trial court refused to record substantial portions of voir dire proceeding]); the minutes have been lost; or there is significant ambiguity in the record. Reconstruction hearings should not be routinely ordered where, as here, the record is simply insufficient to establish facts necessary to meet the defendant’s burden of showing that he was absent from a material stage of the trial.

People v Velasquez

Contrary to defendant Velasquez’s contention, the record establishes that he validly waived his right to be present at sidebar.

In accepting an Antommarchi waiver offered by defense counsel on a defendant’s behalf, a trial court need not engage the defendant in an on-the-record colloquy to ensure the requisite voluntary, knowing and intelligent nature of the waiver (see People v Spotford, 85 NY2d 593, 598 [1995]; People v Epps, 37 NY2d 343, 350-351 [1975]). “[T]here is no requirement that the Judge conduct a pro forma inquisition in each case on the off-chance that a defendant who is adequately represented by counsel . . . may nevertheless not know what he is doing” (People v Francis, 38 NY2d 150, 154 [1975]).

Here, it is plain from the record that defense counsel informed the court at the bench that his client waived his right to be present at sidebar, and that the court then asked counsel to place this waiver on the record. At the close of this bench conference, counsel announced in open court, “Waived,” to which the court immediately responded, “Antommarchi waived.” Unless counsel had informed the court of his client’s decision during the bench conference held to discuss “logistics” (including whether and, if so, how the defendant would be brought to the bench during sidebar conferences), the court could not possibly have understood that counsel’s on-the-record statement, “Waived,” referred to Antommarchi. A reconstruction hearing is therefore not required.

While the better practice would have been to state the substance of the right being waived, nothing in the record calls into question the effectiveness of defendant’s waiver as announced by counsel, as the waiver occurred in open court in the presence of defendant (see People v Keen, 94 NY2d 533, 538 [2000]; People v Santorelli, 95 NY2d 412, 424-425 [2000]). Defendant has thus failed to rebut the presumption of regularity that the waiver was neither offered by defense counsel nor accepted by the trial court without first ascertaining that defendant voluntarily, knowingly and intelligently waived his right to be present at sidebar conferences.

Finally, while in both cases we conclude that defendants’ rights were not violated, greater attentiveness to indicating defendants’ presence, or absence, in the trial record would both protect defendants’ Antommarchi rights and avoid protracted disputes years later.

Accordingly, the order of the Appellate Division in each case should be affirmed.

G.B. Smith, J.

(dissenting). The issue in both of these cases is whether the defendant validly waived his right to be present during questioning of prospective jurors concerning their ability to be fair and impartial. Because the record in each does not indicate that defendant was present or that the defendant made a voluntary, knowing and intelligent waiver of the defendant’s right to be present, I would remand these cases to the trial court for an appropriate determination of whether the defendants were present or whether they made adequate waivers.

A defendant has a statutory right to be present during any questioning of a prospective juror about his or her impartiality (CPL 260.20; People v Antommarchi, 80 NY2d 247 [1992]; People v Sloan, 79 NY2d 386 [1992]). A defendant may waive the right to be présent but the choice to do so must be “knowing and intelligent” (People v Vargas, 88 NY2d 363, 375-376 [1996]; People v Spotford, 85 NY2d 593 [1995]). In these cases the record does not indicate that there was a knowing and intelligent waiver of the defendants’ right to be present during the questioning of prospective jurors.

Defendant Velasquez was convicted of murder in the second degree and sentenced to 25 years to life in prison. The evidence was that defendant killed a woman with whom he had checked into a hotel in Brooklyn, New York, on April 29, 1999.

In Velasquez, the record reveals only the following with respect to Antommarchi:

“the court: Come up counsel. While the jury is coming in, let’s talk about logistics.
(Bench conference off the record)
“defense counsel: Waived.
“the court: Antommarchi waived.”

Defendant contends that there was no knowing, intelligent and voluntary waiver of his right to be present at the sidebar questioning of prospective jurors. In his brief the defendant states:

“Nothing in this terse and cryptic exercise in ‘lawyer ese’ suggested that appellant was aware of and understood the right he was giving up, or that he consented to this strategy. Nor was the slightest effort made to ensure that he understood the right he was relinquishing. The court failed to ask appellant a single question. It never inquired whether defense counsel had discussed the waiver with his client, and counsel made no representations that he had. Neither the court, the prosecutor, nor defense counsel articulated nor even alluded to the substance of the right, so as to alert appellant to the action taken on his behalf. Under these circumstances, there was no valid Antommarchi waiver.”

The People contend that the record is sufficient to conclude that there was a knowing and intelligent waiver of defendant’s right to be present but that if this Court disagrees, the matter should be remanded for a hearing. The Appellate Division majority concluded that the circumstances indicate that defendant made a knowing, intelligent and voluntary waiver of the right to be present. The dissenters, on the other hand, concluded that the record did not reveal that the defendant was made aware of his right to be present and a remand for a hearing was appropriate.

Defendant Foster was convicted of robbery in the first degree, attempted robbery in the first degree and robbery in the second degree and was sentenced to consecutive terms of 15, 10 and 10 years, respectively. The evidence was that on December 11,1997, in Bronx County, defendant and another robbed a student of a chain and that on December 16, 1997, defendant attempted to rob the same complainant of his coat. On December 17, 1997, defendant and another robbed a different complainant of a chain.

In Foster, defendant argues that he is entitled to a new trial because he was excluded from robing room discussions with prospective jurors. The People argue that defendant has failed to present a record that is adequate for review but that the Appellate Division’s factual finding that defendant was present precludes further review by this Court. The Appellate Division concluded, “Review of defendant’s claim that he was denied his right to be present at robing room discussions with prospective jurors is precluded by the lack of a record establishing his absence [citations omitted]. To the extent the record permits review, it indicates that defendant was present during the robing room conferences at issue.” (295 AD2d 107, 107-108.)

As stated, defendant has a right to be present for the examination of a prospective juror’s ability to serve impartially. The presumption of regularity, relied on by the majority, can be rebutted by an appropriate hearing by the trial court as to whether or not the defendant was present for questioning about the qualifications of jurors or knowingly and intelligently waived his right to be present. There is no evidence in these two records that the court reporter, judge, defense attorney, prosecutor or other court personnel are no longer available to give testimony.

The presumption of regularity has been used in a variety of cases including when an exhibit was lost (People v Yavru-Sakuk, 98 NY2d 56 [2002]); or when stenographic notes were lost (People v Glass, 43 NY2d 283 [1977]; People v Strollo, 191 NY 42 [1908]) and when there was an assertion that a judge may have issued a search warrant after taking testimony which had not been made a part of the record (People v Dominique, 90 NY2d 880 [1997]). The presumption of regularity should not be used as a substitute for the reconstruction of a record (People v Harrison, 85 NY2d 794 [1995]; People v Glass, supra). Thus, concluding from a rebuttable presumption, and without a hearing, that the defendant was present or that he voluntarily, intelligently and knowingly waived his right to be present for the questioning of jurors was inappropriate in this case.

Accordingly, I would remand both cases to the trial court for a hearing on defendants’ Antommarchi rights.

Judges Ciparick, Rosenblatt, Graffeo and Read concur with Chief Judge Kaye; Judge G.B. Smith dissents and votes to reverse in a separate opinion.

In each case: Order affirmed.

        People v Maher (89 NY2d 318 [1996]) is not to the contrary. In Maher, we were asked to determine only whether the record established that those conferences at which defendants had been absent constituted the type of proceedings at which their right to be present obtained.


author: Rosenblatt, J.

text:
    [801 NE2d 388, 769 NYS2d 168]
    Michael Cipriano, Appellant-Respondent, v Glen Cove Lodge #1458, B.P.O.E., et al., Respondents, and Gasper Buffa, Respondent-Appellant.
    Argued September 11, 2003;
    decided October 28, 2003

      POINTS OF COUNSEL

      Sordi & Sordi, LLP, Glen Cove (Michael Sordi of counsel), for appellant-respondent.
    I. The courts below erred when they found that plaintiff was in breach of a contract to purchase real property where the seller defendant was unable to tender delivery of marketable title. (Gargano v Rubin, 200 AD2d 554.) II. The courts below erred when they failed to grant plaintiff a judgment for specific performance and/or to assess damages against defendants stemming from their breach of the covenant of good faith and fair dealing. (Burwell v Jackson, 9 NY 535; Vought v Williams, 120 NY 253; BGW Dev. Corp. v Mount Kisco Lodge No. 1552 of Benevolent & Protective Order of Elks of U.S. of Am., 247 AD2d 565; Progressive Solar Concepts v Gabes, 161 AD2d 752; Barnett v Star Mech. Corp., 171 AD2d 142; S.E.S. Importers v Pappalardo, 53 NY2d 455.) III. The courts below erred when they found, by implication, that defendant Buffa possessed a valid subsisting right of first refusal superior to plaintiffs contractual rights to purchase real property, while still finding that plaintiff breached the contract to purchase the property.

      Vincent P. Taranto, P.C., Glen Cove (Vincent P Taranto of counsel), for respondent-appellant.
    I. A seller has an affirmative obligation to present an executed contract with a third party upon demand by a holder of a right of first refusal and not relegate the holder to divining the contract’s terms upon learning of its existence. (LIN Broadcasting Corp. v Metromedia, Inc., 74 NY2d 54; Rome Sav. Bank v Husted & Son, 171 AD2d 1048; Yudell Trust I v API Westchester Assoc., 227 AD2d 471; Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156.) II. A purchaser’s default, as a result of his failure to appear at a closing, which was over a year after the closing date in the contract, does not extinguish the right of a holder of a right of first refusal, when the seller never informed the holder of the contract of sale or its terms although duly demanded. (Yudell Trust I v API Westchester Assoc., 227 AD2d 471.) III. It is a condition precedent that a seller notify a holder of a right of first refusal of an offer to purchase prior to executing a contract of sale with a third party. (LIN Broadcasting Corp. v Metromedia, Inc., 74 NY2d 54; Rome Sav. Bank v Husted & Son, 171 AD2d 1048; Yudell Trust I v API Westchester Assoc., 227 AD2d 471; Keator v State of New York, 23 NY2d 337.) IV The court below erred in considering failed settlement negotiations between plaintiff and defendant Buffa in its deliberations which resulted in the dismissal of defendant Buffa’s cross claim.

      Ryan, Brennan & Donnelly LLP, Floral Park (John M. Donnelly of counsel), for respondents.
    I. The decision to hold plaintiff in default was both warranted and proper. (Gargano v Rubin, 200 AD2d 554; Progressive Solar Concepts v Gabes, 161 AD2d 752; Shapira v United Med. Serv., 15 NY2d 200.) II. At all times, the Lodge and Elks acted in good faith. (BGW Dev. Corp. v Mount Kisco Lodge No. 1552 of Benevolent & Protective Order of Elks of U.S. of Am., 247 AD2d 565, 92 NY2d 813; Progressive Solar Concepts v Gabes, 161 AD2d 752; Barnett v Star Mech. Corp., 171 AD2d 142; Calligar v Fradkoff, 154 AD2d 495; Mancini-Ciolo, Inc. v Scaramellino, 118 AD2d 761.) III. The determination of the court below with respect to Buffa’s claims should be affirmed. (LIN Broadcasting Corp. v Metromedia, Inc., 74 NY2d 54; Yudell Trust I v API Westchester Assoc., 227 AD2d 471; Rome Sav. Bank v Husted & Son, 171 AD2d 1048; Bloomer v Phillips, 164 AD2d 52; Cestone v Brown, 163 AD2d 563, 76 NY2d 711; Shapira v United Med. Serv., 15 NY2d 200.)
   OPINION OF THE COURT

Rosenblatt, J.

In this real property case, we are called, upon to adjudicate the rights and remedies of the three parties before us: the holder of a right of first refusal, the buyer of the property and the seller.

L

In June 1955, five trustees of the Benevolent and Protective Order of Elks, Glen Cove Lodge #1458 (Lodge) entered into a stipulation with Gasper Buffa—who was selling a parcel of land to the Lodge—that promised Buffa a “first option to repurchase” the property at fair market value in the event the Lodge offered the premises for sale. For the first three decades following the grant of this right, the Lodge scrupulously honored its obligations to Buffa. In October 1995, after it had received a bona fide offer to purchase the property, the Lodge extended Buffa the opportunity to exercise his right. In a letter of October 28, 1995 (inadvertently dated 1996), Buffa declined, but said he wanted to keep his “options open” should the Lodge’s deal fall through. Again, in May 1996 and December 1996, the Lodge advised Buffa that it had received bona fide offers for the property and extended him the right of first refusal. In both instances, Buffa declined.

In 1997, the Lodge entered into negotiations with Michael Cipriano for the sale of the property, and on February 10, 1998, the Lodge sent Cipriano a proposed agreement. After substantial delay, the Lodge and Cipriano entered into a contract of sale on July 2, 1999. The agreement, however, was not made contingent on Buffa waiving his right of first refusal, nor did it disclose the existence of that right. Cipriano agreed to pay $550,000 for the property, with $55,000 down. The contract set August 2, 1999 as the closing date. A rider to the contract further provided that:

“In the event title is unmarketable, the sole remedy of the Purchaser will be to accept such title as the Seller shall be able to deliver without abatement in the purchase price, or in the alternative, to cancel this Agreement and receive a refund of the Contract down payment, together with the net charges actually charged to the Purchaser for the examination of title, without insurance . . . and cost of a survey. Upon such refund . . . the Seller shall not be hable for any other costs or damages whatsoever.”

When Cipriano and the Lodge entered into the contract, Cipriano evidently had notice of Buffa’s outstanding right of first refusal. Indeed, Bufia and Cipriano, as long-time members of the Lodge, were well acquainted with one another. Nevertheless, based on the Lodge’s representations, Cipriano was led to believe that Bufia had waived his right. In an August 3, 1999 letter, Cipriano asked the Lodge to confirm that it had Buffa’s written waiver, and to produce it. The Lodge, however, ignored the request. Two days later, Cipriano informed the Lodge that Bufia had not waived his right of first refusal, and, indeed, wanted a price for the waiver. On August 9, Cipriano wrote the Lodge, demanding “immediate clarification” concerning the status of Buffa’s right of first refusal.

Contrary to the Lodge’s representations to Cipriano, Bufia had never waived his right of first refusal. Indeed, the Lodge never extended Bufia the opportunity to exercise his right before or after it entered into its contract with Cipriano, even though Bufia advised the Lodge of his claim. In a September 2, 1999 letter to the Lodge, Bufia expressed his “sincere interest in exercising his ‘re-purchase right’ ” and asked for a copy of the executed contract for his review. The Lodge ignored this request as well. Instead, it demanded proof of Buffa’s right of first refusal. On September 20, Bufia forwarded the Lodge a copy of the 1955 agreement creating the right. He again asked the Lodge for a copy of the Lodge’s contract with Cipriano, and again the Lodge ignored the request.

On September 15, 1999, the Lodge wrote Cipriano to inform him that Bufia had not effected a waiver, and it furnished Cipriano a copy of Buffa’s “purported right of first refusal.” The Lodge also reminded Cipriano that it was “unwilling to bring any action or proceeding or to expend any money or expense with respect to this title issue” and asked him if he was willing to take title, subject to Buffa’s right. On September 24, 1999, Cipriano wrote the Lodge, asking it to clarify its position regarding the status of Buffa’s right of first refusal. When the Lodge failed to reply, Cipriano, by a letter dated October 4, 1999, again asked the Lodge to explain its position with respect to Buffa’s rights. On October 5, in a letter to Cipriano, the Lodge reaffirmed the position it assumed in its September 15 letter: that Cipriano could take title, subject to Buffa’s right of first refusal, but without abatement of the purchase price.

Meanwhile, Cipriano initiated negotiations with Buffa, with the goal of buying out Buffa’s preemptive right. These discussions proved unavailing and delayed Cipriano’s closing with the Lodge. Finally, in a letter to Cipriano dated December 28, 1999, the Lodge attempted to cancel its contract and returned Cipriano’s down payment of $55,000. On January 3, 2000, Cipriano sent the check back, rebuking the Lodge for its attempt at unilateral cancellation. The Lodge responded on January 13, instructing Cipriano to close on January 28. It warned that time was of the essence and that it would count Cipriano’s failure to appear as a default entitling it to keep the down payment. On January 26, 2000, Cipriano informed the Lodge that he was initiating litigation to quiet title and that he did not intend to close on January 28. On January 27, the Lodge informed Cipriano that he had committed an anticipatory breach and that it would keep the down payment.

Cipriano brought this action against the Lodge and Buffa. He alleged that the Lodge could not and did not deliver marketable title to the property, and that the Lodge had interfered with his contractual right to the property. Cipriano sought specific performance and damages for breach of contract. In its answer, the Lodge denied Cipriano’s allegations and argued that when Cipriano signed the contract he had notice of Buffa’s claims to the property. The Lodge also counterclaimed against Cipriano for failing to attend the scheduled January 28, 2000 closing. This default, the Lodge asserted, entitled it to keep the down payment. In his answer, Buffa claimed that he held a valid right of first refusal, that the Lodge violated that right by contracting with Cipriano and that it had failed to extend him an offer to purchase the property or even furnish him with a copy of the contract. Buffa moved for dismissal of Cipriano’s claim and filed a cross claim against the Lodge for damages or specific performance of his right of first refusal.

On the Lodge’s motion for summary judgment, Supreme Court dismissed Cipriano’s claim and Buffa’s cross claim and granted summary judgment on the Lodge’s counterclaim. It also granted Buffa’s motion for summary judgment on Cipriano’s complaint against him. The court determined that the “Lodge was always ready, willing and able to honor its contractual obligations” and that Cipriano had received his bargained-for performance. As to Buffa’s cross claim, the court held that Buffa could not exercise his right of first refusal because the Lodge “[was] not selling the property to plaintiff and indeed abandoned the transaction prior to its consummation.”

Cipriano and Buffa appealed. The Appellate Division modified Supreme Court’s judgment, upholding dismissal of Cipriano’s complaint and Buffa’s cross claim, but issuing a declaration in favor of the Lodge allowing it to keep the down payment. As to Buffa, the Court observed that he had “never exercised his right of repurchase.” (297 AD2d 649, 653 [2002].) Finally, the Court affirmed Supreme Court’s grant of summary judgment for the Lodge on its counterclaim against Cipriano. We granted Cipriano and Buffa leave to appeal, and we now modify.

II. Buffa’s Right of First Refusal

This Court last addressed the enforceability of a right of first refusal in LIN Broadcasting Corp. v Metromedia, Inc. (74 NY2d 54 [1989]). All the parties claim that LIN supports their position. In LIN, we settled the question of “whether a contractual right of first refusal, which has been triggered by a contract to sell to a third party, may be exercised during the specified duration of the right but after the third-party transaction has been abandoned” (id. at 56-57). Stressing the difference between an option and a right of first refusal, we held that the grantor of a right of first refusal is obligated to give the holder of the right only an opportunity to buy the property. The grantor is not obligated to “render more than its promised performance ... by keeping the offer open for the period specified in the first refusal clause” (id. at 62). The holder of a right of first refusal must be given the opportunity to exercise the preemptive right, but the right is extinguished when the contract with the third party expires or is abandoned.

In Yudell Trust I v API Westchester Assoc. (227 AD2d 471, 473 [2d Dept 1996]), the Appellate Division elaborated on our holding in LIN by concluding that someone who holds a right of first refusal may create a “binding contract” with the grantor by exercising the right before the third-party contract expires. The validity of this contract is not affected by “the subsequent expiration of the triggering event” (id.).

Had. Buffa been given the opportunity to exercise his right of first refusal, this case would fall squarely under the settled authority of LIN or Yudell Trust I. One of two scenarios would result, assuming Buffa did not decline his right to buy the property: either (1) Buffa would have exercised his right of first refusal before the breakdown of the Lodge-Cipriano transaction, or (2) he would have attempted to do so after its abandonment. In the first scenario, Buffa’s exercise would have created a binding offer and acceptance between him and the Lodge. In the second scenario, LIN would govern, and Buffa’s ability to exercise his right would have evaporated.

The Lodge, however, never gave Buffa the opportunity to exercise his right of first refusal. In its earlier attempts to sell its property in 1995 and 1996, the Lodge honored an obligation to advise Buffa of any bona fide offers it received and to extend him the opportunity to buy the property on the same terms. Here, the Lodge took no steps to inform Buffa of its impending sale to Cipriano and did not make the contract subject to Buffa’s right. Indeed, it ignored Buffa’s repeated requests for a copy of its contract with Cipriano, as well as his written expressions of interest in exercising his right. The Lodge argues that its failure to respond to Buffa did not deny him a meaningful opportunity to exercise his right of first refusal because Buffa already knew that the Lodge had contracted to sell the property to Cipriano. Inasmuch as Buffa was apprised of the transaction, the argument goes, the Lodge was under no duty to answer his letters or inform him of the terms of its contract with Cipriano. We find this argument wholly unpersuasive.

A right of first refusal is a right to receive an offer, and the grantor’s failure or refusal to extend the holder the opportunity to exercise the right constitutes a breach. As we stated in LIN, “[t]he effect of a right of first refusal. . . is to bind the party who desires to sell not to sell without first giving the other party the opportunity to purchase the property at the price specified” (74 NY2d at 60). Likewise, in Cortese v Connors (1 NY2d 265 [1956]), the Court held that a landlord breached the “first option to purchase” term, i.e., right of first refusal term, of a lease by failing to submit a third party’s offer to purchase the leased premises to the tenants. (Id. at 269; see also 3 Corbin, Contracts § 11.3, at 479-480 [rev ed 1996].) Thus, an owner of land subject to a right of first refusal is obligated contractually to make an offer to the rightholder. A rightholder may be familiar with the broad contours of the grantor’s transaction with a third party, but may nevertheless be handicapped in exercising the right when there is no specific offer from the grantor.

Rather than extending an offer to Buffa, the Lodge ignored his repeated requests for a copy of its contract with Cipriano, as well as his written affirmations of interest in exercising his right. Through its failure to act, the Lodge denied Buffa his bargained-for performance, that is, an opportunity to exercise his preemptive right to buy the property.

Although the Lodge breached its contractual obligations to Buffa, on the unique facts before us, neither specific performance nor damages provides a satisfactory remedy for the Lodge’s default. Specific performance—the principal remedy which Buffa has sought—is inapt when the relations between two parties as to the transfer of an interest in land have yet to ripen into a binding contractual agreement. Specific performance may be granted only where the holder of the right of first refusal is shown to be “ready, willing, and able to purchase the property, not only when the right ripens, but also when specific performance is ordered” (25 Williston, Contracts § 67:85, at 504 [4th ed]). Notwithstanding Buffa’s letters to the Lodge or his effort to vindicate his right of first refusal through litigation, there is little in the record to support his assertion that he was ready, willing, and able to buy the property. If anything, his readiness to negotiate with Cipriano and waive his right of first refusal suggests that Buffa was less interested in buying the property than he was in selling his right. Given the haze of uncertainty surrounding Buffa’s actual intent in the summer and fall of 1999, as well as the likely appreciation of the Lodge’s property over the past four years, a grant of specific performance enabling Buffa to purchase the Lodge’s property at the 1999 contract price could yield him a potential windfall.

As an alternative to specific performance, Buffa seeks damages against the Lodge for breach of his right of first refusal. We conclude that an award of damages is not warranted under the unusual facts before us. Although the Lodge wrongfully deprived Buffa of an opportunity to exercise his right, Buffa suffered no injury as a result of the Lodge’s breach. Buffa continues to hold the same right he held at the outset of the Lodge’s initial 1998 negotiations with Cipriano. As in the past, Buffa can still invoke his right of first refusal against the offer of any future prospective purchaser. Moreover, he will still cast a cloud over the Lodge’s title, and may seek compensation from potential buyers who want him to waive his right. Because the Lodge caused no appreciable injury to Buffa, no damages can flow from its breach.

III. Cipriano’s Down Payment

Affirming Supreme Court’s grant of summary judgment for the Lodge, the Appellate Division found that the Lodge had fulfilled its contractual obligations to Cipriano and that Cipriano could have cancelled the contract and retained his down payment. The Court concluded that Cipriano had been “given more than a reasonable opportunity to perform under the contract of sale” but had failed to do so. (297 AD2d at 652.) The Lodge, the Court reasoned, was therefore entitled to hold Cipriano in default and keep the down payment.

Cipriano maintains that the courts below erred in granting the Lodge summary judgment on its counterclaim. The Lodge’s failure to produce marketable title, he argues, barred it from holding him in default and retaining his down payment. Under the circumstances of this case, we agree with Cipriano.

In Maxton Bldrs. v Lo Galbo (68 NY2d 373 [1986]), we reaffirmed a rule that has become axiomatic: a “vendee who defaults on a real estate contract without lawful excuse, cannot recover the down payment” (id. at 378). Cipriano had such a lawful excuse. Although Cipriano did not appear at the January 28, 2000 closing, his failure is at least matched by the Lodge’s recalcitrant behavior. To the extent the Appellate Division found that the Lodge acted in good faith in its efforts to convey title, there is no evidence in the record to support this determination (see Smirlock Realty Corp. v Title Guar. Co., 63 NY2d 955, 957-958 [1984]). First, the Lodge contracted with Cipriano while misrepresenting Buffa’s readiness to waive his right of first refusal. It then handicapped Cipriano’s efforts to clear title by ignoring Buffa’s repeated entreaties for a copy of the contract. After that, the Lodge tried to effect a unilateral cancellation of its contract with Cipriano. The Lodge maintains that Cipriano’s refusal to accept this cancellation should, in effect, estop him from attacking its failure to deliver marketable title. We are not persuaded.

We acknowledge that a rider to the Cipriano-Lodge contract relieved the Lodge of any obligation “to bring any action or proceeding or to expend any sums of money or to incur any expense in order to render title marketable.” Nevertheless, this clause does not excuse the Lodge’s dereliction. Where a seller draws a prospective buyer into a transaction when it cannot possibly convey marketable title and then itself stymies the efforts of the buyer to remove the encumbrance, the seller may not rely on the language of the rider to keep the buyer’s down payment. Because the Lodge was in material breach of its contractual obligations to Cipriano, we conclude that Cipriano had a lawful excuse for his failure to appear on the January 28 closing date. The Appellate Division’s holding that the Lodge was entitled to retain Cipriano’s down payment was therefore in error.

We have reviewed Cipriano’s other arguments and find them to be without merit.

Accordingly, the order of the Appellate Division should be modified, without costs, consistent with this opinion and as so modified, affirmed.

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

Order modified, etc.

      . Although the Lodge promised Buffa a right of first refusal in the June 1955 stipulation, the buyer, Michael Cipriano, maintains that Buffa does not in fact hold a valid right of first refusal. He argues that Buffa’s failure to reserve his right in his July 12, 1955 bargain and sale deed to the Lodge extinguished whatever preemptive rights he may have enjoyed. We do not reach this argument because it was not preserved for our review. For the purpose of this appeal, we will assume, as did the court below, that Buffa held a valid right of first refusal.

        . We note that a right of first refusal goes by other names, including “first option to buy,” “first privilege of buying,” “preemptive option,” “preemptive right,” “preemptive right to purchase,” “right of preemption,” “first right of purchase,” “first-refusal-to-purchase option,” and “preferential right to purchase” (see 3 Corbin, Contracts § 11.3, at 469 n 1 [rev ed 1996]).

      . At least one prominent commentator maintains that a grantor breaches its obligations under a right of first refusal when it executes a contract with a third-party vendee before procuring a waiver from the rightholder (see 3 Corbin, Contracts § 11.3, at 480 [rev ed 1996]). This is not the law in New York. The grantor of a right of first refusal may enter into a contract with a third party for the sale of subject property, as long as the contract provides that the passage of title is contingent upon a waiver by the holder of the right of first refusal (see LIN, 74 NY2d at 59).


author: Chief Judge Kaye.

text:
    [801 NE2d 835, 769 NYS2d 459]
    First Financial Insurance Company, Respondent, v Jetco Contracting Corp., Appellant, et al., Defendants. (And a Third-Party Action.)
    Decided November 20, 2003

      POINTS OF COUNSEL

      Goddard Ronan & Dineen, L.L.R, Garden City (<Joseph E Dineen of counsel), for appellant.
    I. Investigating possible alternate sources of insurance is not a valid excuse for an insurer’s delayed notification of disclaimer under Insurance Law § 3420 (d). (Matter of Firemen’s Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836; McGinnis v Mandracchia, 291 AD2d 484; City of New York v Northern Ins. Co., 284 AD2d 291.) II. First Financial’s 48-day delay in disclaiming coverage based on late notice was unreasonable as a matter of law and precluded First Financial from denying coverage to Jeteo. (Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; Wasserheit v New York Cent. Mut. Fire Ins. Co., 271 AD2d 439; Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507; Matter of Colonial Penn Ins. Co. v Pevzner, 266 AD2d 391; West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278; Squires v Robert Marini Bldrs., 293 AD2d 808.)

      Ford Marrin Esposito Witmeyer & Gleser, L.L.P., New York City {James M. Adrian and Rebecca J. Foote of counsel), for respondent.
    I. Under New York Insurance Law § 3420 (d), an insurer may wait a reasonable period of time to notify the insured of denial of coverage until after the insurer has conducted an investigation into alternate, third-party sources of insurance benefitting the insured. (Zappone v Home Ins. Co., 55 NY2d 131; Excelsior Ins. Co. v Antretter Contr. Corp., 262 AD2d 124; Allstate Ins. Co. v Gross, 27 NY2d 263; Hartford Ins. Co. v County of Nassau, 46 NY2d 1028; Matter of Firemen’s Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836.) II. An unexcused delay in notification of 48 days is not unreasonable as a matter of law under Insurance Law § 3420 (d). (Hartford Ins. Co. v

      County of Nassau, 46 NY2d 1028; Reynolds Metal Co. v Aetna Cas. & Sur. Co., 259 AD2d 195; General Acc. Ins. Group v Cirucci, 46 NY2d 862; TIG Ins. Co. v Town of Cheektowaga, 142 F Supp 2d 343; Mount Vernon Fire Ins. Co. v Harris, 193 F Supp 2d 674; Wilczak v Ruda & Capozzi, 203 AD2d 944; Allstate Ins. Co. v Gross, 27 NY2d 263; City of New York v Northern Ins. Co. of N.Y., 284 AD2d 291; Matter of Colonial Penn Ins. Co. v Pevzner, 266 AD2d 391; McGinnis v Mandracchia, 291 AD2d 484.)
   OPINION OF THE COURT

Chief Judge Kaye.

The United States Court of Appeals for the Second Circuit, by two certified questions, has asked us to clarify whether an insurer’s 48-day delay in notifying a policyholder of denial of coverage is unreasonable as a matter of law under Insurance Law § 3420 (d), where the purpose of the delay is to investigate the existence of other, third-party sources of insurance. The central issue is whether such delay is excusable, even though the existence of alternative sources is not a factor in the insurer’s decision to deny coverage. We conclude that once the insurer has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage, it must notify the policyholder in writing as soon as is reasonably possible. Furthermore, an unexcused 48-day delay is unreasonable as a matter of law.

On July 9, 1998, falling scaffolding hit Gavin Hanna—an employee of Jetco’s scaffolding subcontractor—while he was at work restoring the facade of a New York University (NYU) building. On January 6, 1999, Hanna brought suit in Bronx County Supreme Court against Jeteo and NYU for negligence under various state statutes. Jetco’s president and general manager learned of the accident the very day it occurred but failed to inform its commercial general liability insurer, First Financial Insurance Company, which learned of the accident from NYU on February 23, 1999. By letter dated March 2, 1999, First Financial’s authorized agent advised the policyholder that this was “a late notice situation,” and reserved its right to deny coverage because Jeteo had failed to comply with the policy’s provision requiring notice of an occurrence as soon as practicable. On March 30, 1999, First Financial confirmed that Jet-co’s president had known of the accident since the day it occurred. However, the insurer failed to notify Jeteo of its decision to deny coverage until May 17, 1999—48 days after First Financial’s agent confirmed the grounds for disclaiming coverage. The insurer claims that this delay was excusable because it resulted from an investigation into other sources of insurance for Jeteo.

First Financial sought a declaratory judgment from the United States District Court for the Southern District of New York that the policy did not cover Jeteo for Hanna’s suit. Whether the 48-day delay was reasonable as a matter of law became material because the insurer’s failure to provide notice as soon as is reasonably possible precludes effective disclaimer, even though the policyholder’s own notice of the incident to its insurer is untimely (see Hartford Ins. Co. v County of Nassau, 46 NY2d 1028, 1029 [1979]).

The District Court concluded that the insurer’s 48-day delay was reasonable because its investigation into alternative sources of insurance was clearly for Jetco’s benefit, which the court felt should be encouraged even though the insurer would itself have denied coverage regardless of the existence of any other insurance benefitting Jeteo. The District Court refused to read Insurance Law § 3420 (d) in a way that would prohibit an insurer from waiting to notify a policyholder of denial of coverage until after the insurer has conducted an alternative source investigation, because insurance companies would be forced to disclaim coverage before seeking additional sources of coverage. In its appeal to the Second Circuit, Jeteo challenged the District Court’s finding that the insurer’s delayed disclaimer was reasonable under Insurance Law § 3420 (d).

Concerned that New York law is unclear as to whether an insurer’s investigation into other, third-party sources of insurance is a sufficient excuse for delay, and if not, whether an unexcused delay of 48 days could be unreasonable as a matter of law—both novel policy issues with wider implications—the Second Circuit certified two questions to this Court.

“1. Under N.Y. Ins. Law § 3420(d), may an insurer who has discovered grounds for denying coverage wait to notify the insured of denial of coverage until after the insurer has conducted an investigation into alternate, third-party sources of insurance benefitting the insured, although the existence or non-existence of alternate insurance sources is not a factor in the insurer’s decision to deny coverage?
“2. If an investigation into alternate sources of insurance is not a proper basis for delayed notification under N.Y. Ins. Law § 3420(d), is an unexcused delay in notification of 48 days unreasonable as a matter of law under § 3420(d)?” (322 F3d 750, 752 [2003].)

We now answer the first question in the negative, and the second in the affirmative.

Discussion

New York Insurance Law § 3420 (d) provides:

“If under a liability policy delivered or issued for delivery in this state, an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant.”

While the Legislature specified no particular period of time, its words “as soon as is reasonably possible” leave no doubt that it intended to expedite the disclaimer process, thus enabling a policyholder to pursue other avenues expeditiously. As the Legislature’s 1975 Budget Report on the bill that ultimately became section 3420 (d) noted, the purpose “is to assist a consumer or claimant in obtaining an expeditious resolution to liability claims by requiring insurance companies to give prompt notification when a claim is being denied” (30-Day Budget Report on Bills, Bill Jacket, L 1975, ch 775).

That notice of disclaimer must be prompt, however, still leaves unresolved the questions of when promptness is to be measured from, and whether as a matter of law an insurer may delay notification in order to investigate other sources of insurance potentially available to its policyholder.

As we have made clear, “timeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage” (Matter of Allcity Ins. Co. [Jimenez], 78 NY2d 1054, 1056 [1991], citing Hartford, 46 NY2d at 1029). Moreover, an insurer’s explanation is insufficient as a matter of law where the basis for denying coverage was or should have been readily apparent before the onset of the delay (Matter of Firemen’s Fund Ins. Co. of Newark v Hopkins, 88 NY2d 836, 837-838 [1996]). Here, First Financial was aware that Jetco’s claim was untimely when the insurer learned of the accident on February 23, 1999 (as noted in its March 2 letter to Jeteo), or at the latest on March 30 (when its agent confirmed that Jetco’s president had known of the accident since the day it occurred). For present purposes we assume that on March 30, 1999, the clock began to run on First Financial’s obligation to give written notice to Jeteo disclaiming coverage.

An insurer who delays in giving written notice of disclaimer bears the burden of justifying the delay. While Insurance Law § 3420 (d) speaks only of giving notice “as soon as is reasonably possible,” investigation into issues affecting an insurer’s decision whether to disclaim coverage obviously may excuse delay in notifying the policyholder of a disclaimer (see e.g. 2540 Assoc. v Assicurazioni Generali, 271 AD2d 282, 284 [1st Dept 2000] [delay reasonable because of insurer’s need to conduct a “prompt, diligent and good faith investigation of the claim”]; DeSantis Bros. v Allstate Ins. Co., 244 AD2d 183, 184 [1st Dept 1997] [delay reasonable because of need to review 500-page file and conduct legal research]; Aetna Cas. & Sur. Co. v Brice, 72 AD2d 927, 928-929 [4th Dept 1979] [delay reasonable due to insurer’s difficulty gathering evidence because all those involved in accident had been killed]).

We cannot accept, however, that delay simply to explore other sources of insurance for the policyholder—an excuse unrelated to the insurer’s own decision to disclaim—is permissible. While First Financial urges that, as a matter of policy, such inquiries should be encouraged because they are for the benefit of the insured, we note that they may also be in the insurer’s interest in reducing its ultimate risk, and further may detrimentally delay the policyholder’s own search for alternative coverage. When the insurer promptly disclaims coverage, the policyholder—perhaps with the aid of its own broker or insurance agent—is best motivated by its own interest to explore alternative avenues of protection.

Having concluded that investigation into possible other sources of insurance is not an acceptable reason for delayed disclaimer, we reach the Second Circuit’s second question: Is an unexcused delay of 48 days unreasonable as a matter of law?

On the one hand, we appreciate the desire for a fixed yardstick against which to measure the reasonableness, or unreasonableness, of an insurer’s delay. In this respect we note that the Appellate Division several times has found fixed periods of less than 48 days unreasonable as a matter of law (see e.g. West 16th St. Tenants Corp. v Public Serv. Mut. Ins. Co., 290 AD2d 278, 279 [1st Dept 2002] [30 days]; Matter of Nationwide Mut. Ins. Co. v Steiner, 199 AD2d 507, 508 [2d Dept 1993] [41 days]; Matter of Colonial Penn Ins. Co. v Pevzner, 266 AD2d 391 [2d Dept 1999] [41 days]; Squires v Robert Marini Bldrs., 293 AD2d 808, 810 [3d Dept 2002] [42 days]). On the other hand, the difficulty with imposing a fixed time period—which the Legislature scrupulously avoided—is that most often the question whether a notice of disclaimer has been sent “as soon as is reasonably possible” will be a question of fact, dependent on all of the circumstances of a case that make it reasonable, or unreasonable, for an insurer to investigate coverage (see Hartford, 46 NY2d at 1030; Allstate Ins. Co. v Gross, 27 NY2d 263, 270 [1970]).

One thing is clear: that it is the responsibility of the insurer to explain its delay. Where, in Hartford, the insurer gave absolutely no explanation for its delay, this Court concluded that a delay of 62 days was, as a matter of law, unreasonable. Clearly a delay of 48 days in those circumstances would have been as well. Here, we see no material difference between a delay that is unexplained and a delay that is unexcused, meaning the explanation is unsatisfactory. The insurer’s 48-day delay in giving written notice, on the facts before us, was unreasonable as a matter of law.

Accordingly, certified question No. 1 should be answered in the negative and certified question No. 2 should be answered in the affirmative.

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

Following certification of questions by the United States Court of Appeals for the Second Circuit and acceptance of the questions by this Court pursuant to section 500.17 of the Rules of the Court of Appeals (22 NYCRR 500.17), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question No. 1 answered, in the negative and certified question No. 2 answered in the affirmative.

      . Three witnesses testified at trial that First Financial’s investigation into other sources of insurance did not affect insurer’s decision to deny coverage. In the words of one witness: “Whether there is an additional insure[r] really has no bearing on whether it’s late. If it’s late, it’s late and we will deny coverage.”

      . The court further noted that Jeteo suffered no prejudice from the time it took First Financial to investigate additional sources of coverage—though correctly observing that prejudice is of no legal relevance here (see Allstate Ins. Co. v Gross, 27 NY2d 263, 269-270 [1970]).