author: Read, J.

text:
    [850 NE2d 1137, 818 NYS2d 161]
    Bates Advertising USA, Inc., Respondent, v 498 Seventh, LLC, Appellant.
    Argued March 30, 2006;
    decided May 11, 2006

      POINTS OF COUNSEL

      Blank Rome LLP, New York City (Edward L. Sadowsky and Inbal Paz of counsel), for appellant.
    I. The liquidated damages provision was intended as an enforcement mechanism wholly unrelated to allowable compensation and as such was unenforceable. (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373.) II. Bates Advertising USA, Inc.’s contribution to delay abrogated its claim for liquidated damages. (Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479; United States v United Engineering & Contracting Co., 234 US 236.) III. The trial court rewrote the lease and otherwise misstated the law so as to impose obligations on appellant to which the parties had not agreed. (Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470; W.W.W. Assoc. v Giancontieri, 77 NY2d 157; Matter of

      Wallace v 600 Partners Co., 86 NY2d 543; Reiss v Financial Performance Corp., 97 NY2d 195; People v Gonzalez, 68 NY2d 424; Hayden v New York Rys. Co., 233 NY 34; Mosler Safe Co. v Maiden Lane Safe Deposit Co., 199 NY 479; Lee v Wright, 108 AD2d 678; Simon & Son Upholstery v 601 W. Assoc., 268 AD2d 359.)

      Greenberg Traurig, LLP, New York City (John F. Triggs, Henry M. Greenberg, Israel Rubin and Peter Yu, Jr., of counsel), for respondent.
    I. The lease’s rent abatement clause is enforceable as a liquidated damages provision. (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373; Truck Rent-A-Ctr. v Puritan Farms 2nd, 41 NY2d 420; Hackenheimer v Kurtzmann, 235 NY 57; Cotheal v Talmage, 9 NY 551; Maxton Bldrs. v Lo Galbo, 68 NY2d 373; Clement v Cash, 21 NY 253; Kobylack v Kobylack, 62 NY2d 399; Matter of Nassau Educ. Ch. of Civ. Serv. Empls. Assn. v Great Neck Union Free School Dist., 57 NY2d 658; Picotte Realty v Gallery of Homes, 66 AD2d 978; In re United Merchants & Mfrs., Inc., 674 F2d 134.) II. The affirmed factual findings of 498 Seventh, LLC’s material breaches of the lease, and the absence of any supposed waiver by Bates Advertising USA, Inc., are beyond this Court’s review. (Glenbriar Co. v Lipsman, 5 NY3d 388; Thoreson v Penthouse Intl., 80 NY2d 490.)
   OPINION OF THE COURT

Read, J.

In November 1997, plaintiff Bates Advertising USA, Inc., a large advertising and marketing firm, entered into a lease with defendant 498 Seventh, LLC so that Bates might relocate its 700-person worldwide headquarters from the Chrysler Building into space in 498’s building in New York City’s Garment District. Both plaintiff tenant and defendant landlord, sophisticated business entities, were represented by experienced real estate counsel throughout lengthy negotiations that produced an 85-page lease with 23 exhibits. Bates was to become the building’s anchor tenant and occupy approximately 25% of its floor space. The base rent for the 16-year lease, with options and other rent escalations, exceeds $100 million.

Exhibit C to the lease, captioned “LANDLORD’S WORK,” lists numerous upgrades and improvements that 498 agreed to make to the building in order to provide Bates with the amenities, safety and security that it had bargained for. Part E of exhibit C lists 11 required alterations, including providing a class E fire alarm and communications system, installing a card key system for after-hours access to the building, and upgrading an existing freight elevator to passenger-elevator quality. “[I]n an attempt to have the tenancy begin as early as possible while ensuring that [498] would be sufficiently motivated to follow through with these items [in part E of exhibit C] after [Bates] took possession,” the parties followed the common practice “adopted by the real estate profession generally” and included a rent abatement clause in the lease (291 AD2d 179, 181 [1st Dept 2002]). Under the terms of this provision, if 498 had not substantially completed the described work by January 1, 1999, and Bates had already moved in and was conducting its ordinary business, then Bates was entitled to abatement of one-half day’s rent for each day’s delay in substantially completing one or more of nine of the 11 items; and abatement of a full day’s rent for each day’s delay in substantially completing either or both of the two most important of the 11 items, one of which was provision of a class E fire alarm and communications system.

Bates’s lease in the Chrysler Building expired on March 31, 1999, without any renewal options, and so Bates moved into 498’s building on March 22, 1999. After an initial and undisputed rent-free period, Bates commenced paying rent as of June 13, 1999, subject to reservation of its rights under the lease’s rent abatement clause. Alleging that work required by the lease remained unfinished, Bates commenced this action against 498 in December 1999, seeking refund of rent and other relief. Bates contended that it had not received the benefit of its bargain under the lease, forcing it to occupy space that was less valuable than the top-shelf commercial accommodations envisaged by the parties when they fixed the rent, and posing a threat to its employees’ safety and security, its global operations and worldwide computer systems, and its image in the international advertising and marketing industry.

Supreme Court dismissed Bates’s causes of action grounded on the rent abatement clause, concluding that this provision was an unenforceable penalty. The Appellate Division reversed on the law, reinstated these causes of action, and remanded the matter for further proceedings. The Appellate Division noted that the situation that the rent abatement clause sought to address was “not unique to these parties” (291 AD2d at 181). Namely, the contracted-for alterations “were a vital part of the deal,” but “as a practical matter, it would be difficult for [Bates] to prove the value of its damages arising from a breach of this lease term” because, for example,

“there would be no way of knowing whether a loss of a client, or an employee, had been caused by conditions in the building. Therefore, although [Bates] was willing to begin its tenancy before all the agreed-upon alterations had been completed, and [498] was no less interested in the tenancy beginning, it was necessary for the parties to acknowledge and somehow provide for the possibility of delays attendant to these additional alterations” (id.).

The Appellate Division further observed that “[b]y imposing [a] one-to-one proportionality between the days the breach continued and the value of the compensation, the parties successfully avoided the possibility that the tenant would obtain a benefit in gross disproportion to the injury it suffered” (id. at 183). Nor was “vast disproportion created by the fact that the full-day abatement would be applicable whether one or both of two possible improvements remained uncompleted,” or by the parties’ designation of a “group of work items, any or all of which would trigger the maximum of a half-day rent abatement for each day of delay” (id.). These “minor” disproportions were “as likely to inure to the benefit of the landlord as to that of the tenant” (id. at 184).

After a bench trial, Supreme Court concluded that 498 breached the lease by failing to provide the required class E fire alarm and communications system until May 9, 2000, or 412 days after March 23, 1999, the day after Bates moved into the building. There was no dispute that Bates’s rent payments for the 412-day period following June 13, 1999, when Bates commenced paying rent, totaled $4,339,528.61. Thus, Supreme Court awarded Bates rent abatement credits in this amount against which to offset future rent payments. The Appellate Division affirmed “for the reasons stated” by Supreme Court (19 AD3d 290, 290 [1st Dept 2005]). We granted permission to appeal, and now also affirm.

Although 498 protests that it did not breach the lease, Supreme Court concluded otherwise and the Appellate Division affirmed. We may not revisit Supreme Court’s affirmed factual findings underpinning the determination of breach, which are supported by the record (see Karger, Powers of the New York Court of Appeals § 13:10, at 489 [3d ed rev] [“(F)indings of fact made by the nisi prius court which have been expressly affirmed by the Appellate Division and have the requisite evidentiary support are . . . conclusive and binding on the Court”]). Moreover, in light of these factual findings, 498 materially breached the lease. Thus, the only remaining issue for us to resolve — and the main point of contention between the parties — is whether the rent abatement clause is a proper remedy for this breach.

Whether a contractual provision “represents an enforceable liquidation of damages or an unenforceable penalty is a question of law, giving due consideration to the nature of the contract and the circumstances” (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 379 [2005]). The party challenging the liquidated damages — in this case, 498 — “must demonstrate either that damages flowing from [the failure to complete on time the items of work called for by the lease] were readily ascertainable at the time [Bates and 498] entered into their [lease], or that [the rent abatement] is conspicuously disproportionate to these foreseeable losses” (id. at 380).

498 has not attempted to show that damages attributable to its failure to complete the contracted-for work by the promised date were readily ascertainable at the time the parties entered into the lease. Instead, 498 argues that the rent abatement clause is illegitimate and unenforceable because Bates’s attorney testified that the clause was intended to “incentivize” the landlord, and to provide “a club over his head to make sure he gets the work done.” But the prospect of damages in the event of breach may always be said to encourage parties to comply with their contractual obligations. Liquidated damages are not transformed into a penalty merely because they operate in this way as well, so long as they are not grossly out of scale with foreseeable losses. In this case, we agree with the Appellate Division that 498 has not demonstrated that the rent abatements are conspicuously disproportionate to Bates’s foreseeable losses. Rent abatement was keyed to the number of days of 498’s nonperformance, and varied from a half day to a day depending upon the importance of the item of work not completed.

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

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

Order affirmed, with costs.

       Supreme Court also determined that 498 breached the lease by providing the lobby card access system 314 days late, and the private passenger elevator service 23 days late. Because the rent abatements under the lease’s liquidated damages clause run concurrently, the resulting half-day credits for these breaches were subsumed within the $4 million credit.


source: Caselaw Access Project

author: R.S. Smith, J.

license: Public Domain

text:
    [850 NE2d 1147, 818 NYS2d 171]
    Town of Mount Pleasant, Respondent, v Legion of Christ, Inc., Appellant.
    Argued May 2, 2006;
    decided June 6, 2006

      POINTS OF COUNSEL

      Shamberg Harwell Davis & Hollis, P.C., Mount Kisco (P. Daniel Hollis, III, John S. Harwell and Diana Bunin of counsel), and Bleakley Platt & Schmidt, LLP, White Plains (Hugh D. Fyfe of counsel), for appellant.
    I. The Legion of Christ, Inc.’s use of the Legion II parcel is permitted “as of right” and fully complies with zoning. (Federated Conservationists of Westchester County v County of Westchester, 304 AD2d 787; Ebenezer Mar Thoma Church v Alexander, 279 AD2d 548; Matter of Toys “R” Us v Silva, 89 NY2d 411; Matter of Allen v Adami, 39 NY2d 275; United States v Harriss, 347 US 612; People v Goodman, 31 NY2d 262; People v First Meridian Planning Corp., 86 NY2d 608; Trustees of Union Coll, in Town of Schenectady in

      State of N.Y. v Members of Schenectady City Council, 91 NY2d 161; Matter of Diocese of Rochester v Planning Bd. of Town of Brighton, 1 NY2d 508; Cornell Univ. v Bagnardi, 68 NY2d 583.) II. The Town of Mount Pleasant’s unequal treatment of the Legion of Christ, Inc. and International Business Machines Corporation violates both state and federal law. (Matter of St. Onge v Donovan, 71 NY2d 507; Matter of Dexter v Town Bd. of Town of Gates, 36 NY2d 102; Vernon Park Realty, Inc. v City of Mount Vernon, 307 NY 493; Matter of Yeshiva & Mesivta Toras Chaim v Rose, 136 AD2d 710; Bright Horizon House v Zoning Bd. of Appeals of Town of Henrietta, 121 Misc 2d 703; Matter of Apostolic Holiness Church v Zoning Bd. of Appeals of Town of Babylon, 220 AD2d 740; Matter of PACER, Inc. v Planning Bd. of City of Middletown, 217 AD2d 47, 87 NY2d 810; Matter of Diocese of Rochester v Planning Bd. of Town of Brighton, 1 NY2d 508; Midrash Sephardi, Inc. v Town of Surfside, 366 F3d 1214; Konikov v Orange County, Fla., 410 F3d 1317.) III. The Appellate Division engaged in proscribed judicial legislation when it improperly created a new special permit use in the OB-CB zoning district. (Clark v Cuomo, 66 NY2d 185; Matter of Anonymous, 40 NY2d 96; Bright Homes v Wright, 8 NY2d 157; Parochial Bus Sys. v Board of Educ. of City of N.Y., 60 NY2d 539; Berenson v Town of New Castle, 38 NY2d 102; Matter of Retail Prop. Trust v Board of Zoning Appeals of Town of Hempstead, 98 NY2d 190; Matter of North Shore Steak House v Board of Appeals of Inc. Vil. of Thomaston, 30 NY2d 238; Rodgers v Village of Tarrytown, 302 NY 115; Udell v Haas, 21 NY2d 463; Matter of Consolidated Edison Co. of N.Y. v Department of Envtl. Conservation, 71 NY2d 186.)

      Thacher Proffitt & Wood LLP, White Plains (Kevin J. Plunkett, Lino J. Sciarretta and Stefanie A. Bashar of counsel), for respondent.
    I. The record demonstrates that the Legion of Christ, Inc. is using the property as a seminary or a private college, which is not a permitted use without a special permit. (Four Winds Assoc. v Rachlin, 248 AD2d 352; Matter of Wilson v McGlinchey, 2 NY3d 375; Matter of Hime Y., 54 NY2d 282; Matter of Toys “R” Us v Silva, 89 NY2d 411; Matter of Allen v Adami, 39 NY2d 275; Warm v State of New York, 308 AD2d 534, 2 NY3d 703; Kiett v New York City Hous. Auth., 255 AD2d 422; BGW Dev. Corp. v Mount Kisco Lodge No. 1552 of Benevolent & Protective Order of Elks of U.S. of Am., 247 AD2d 565; People v First Meridian Planning Corp., 86 NY2d 608; Trustees of Union Coll. in Town of Schenectady in State of N.Y. v Members of Schenectady City Council, 91 NY2d 161.) II. The Town of Mount Pleasant is regulating the use, not the user, of the property. (McMinn v Town of Oyster Bay, 66 NY2d 544; Village of Euclid v Ambler Realty Co., 272 US 365; Matter of St. Onge v Donovan, 71 NY2d 507; Matter of Dexter v Town Bd. of Town of Gates, 36 NY2d 102; Matter of PACER, Inc. v Planning Bd. of City of Middletown, 217 AD2d 47.) III. The Appellate Division should be affirmed with respect to its finding that the Town of Mount Pleasant has not violated the Religious Land Use and Institutionalized Persons Act. (Flanagan v Prudential-Bache Sec., 67 NY2d 500; 423 S. Salina St. v City of Syracuse, 68 NY2d 474; Sherbert v Verner, 374 US 398; Hill v Colorado, 530 US 703; Employment Div., Dept. of Human Resources of Ore. v Smith, 494 US 872; Bowen v Roy, 476 US 693; City of Boerne v Flores, 521 US 507; Elsinore Christian Ctr. v City of Lake Elsinore, 291 F Supp 2d 1083; Westchester Day School v Village of Mamaroneck, 386 F3d 183; Mayweathers v Terhune, 328 F Supp 2d 1086.) IV The Appellate Division’s interpretation of the Town of Mount Pleasant zoning code was rational and does not constitute improper “judicial legislation.” (Matter of Baker v Town of Islip Zoning Bd. of Appeals, 20 AD3d 522; Matter of Tartan Oil Corp. v Bohrer, 249 AD2d 481; Shroid Constr. v Dattoma, 250 AD2d 590.) V. The Town of Mount Pleasant was denied a fair trial. (12-16 Arden Assoc. v Vasquez, 168 Misc 2d 475; People v Diaz, 130 Misc 2d 1024; Rudnik v Norwich Pharmacal Co., 34 AD2d 912.)

      Robert L. Greene, Washington, DC, Anthony R. Picarello, Jr., and Derek L. Gaubatz for The Becket Fund for Religious Liberty, amicus curiae.
    I. Because sections 2 (a) and 2 (b) of the Religious Land Use and Institutionalized Persons Act (42 USC § 2000cc) operate independently, strict scrutiny analysis is misplaced under section 2 (b). (Church of Lukumi Babalu Aye, Inc. v Hialeah, 508 US 520; Epperson v Arkansas, 393 US 97; New Orleans v Dukes, 427 US 297; Midrash Sephardi, Inc. v Town of Surfside, 366 F3d 1214; Board of Trustees of Univ. of Ala. v Garrett, 531 US 356; Varner v Illinois State Univ., 226 F3d 927; Civil Liberties for Urban Believers v City of Chicago, 342 F3d 752; Freedom Baptist Church of Delaware County v Township of Middletown, 204 F Supp 2d 857; Konikov v Orange County, Fla., 410 F3d 1317.) II. Recent decisions confirm the Legion of Christ, Inc.’s position on substantial burden and strict scrutiny. (Civil Liberties for Urban Believers v City of Chicago, 342 F3d 752; Sts. Constantine & Helen Greek Orthodox Church, Inc. v City of New Berlin, 396 F3d 895; Living Water Church of God v Charter Twp. of Meridian, 384 F Supp 2d 1123.)
   OPINION OF THE COURT

R.S. Smith, J.

The Town of Mount Pleasant Code allows the use of a parcel of land for “[Conference and training facilities.” When this zoning was adopted the property was owned by International Business Machines Corporation (IBM), which used it to train its own employees, and rented it to others who made similar use of it. IBM sold the property to defendant, Legion of Christ, Inc. (the Legion), an order of the Roman Catholic Church, which uses the property for the training of future priests and for other religious education. Apart from the subject matter taught, the chief difference between IBM’s use and the Legion’s is that many of the people now being taught are in long-term programs and thus live on the property for a year or two. We hold that, despite this difference, the property is still being used for conference and training purposes within the meaning of the Town Code, and the Legion’s use is therefore permitted as of right.

Facts and Procedural History

IBM acquired the 97-acre property sometime before 1983, when the Town created a new “Office Corporate Education” or “OB-CE” zoning district, coextensive with the property. A provision of the Town Code enacted in that year said that one of the purposes of the new district was to provide an “opportunity for private enterprise” to educate “the employees of major corporations” (Town of Mount Pleasant, Addendum to Zoning Book, June 28, 1983). IBM built a conference center on the property, which it used to train its employees.

IBM decided in the early 1990s that it wanted to rent out its conference center from time to time, and it asked for and was granted a change in the Town Code’s description of the OB-CE district. A 1993 amendment eliminated the Code’s reference to “private enterprise” and changed its language to refer to “the employees of major corporations and others” (see Town of Mount Pleasant Code § 218-74, as amended Feb. 9, 1993). After this zoning change, IBM rented the property to profit-making and nonprofit enterprises, including a university, a college and a church. These lessees used IBM’s facility for conference and training purposes without objection from the Town.

The Town did object, however, when IBM sold the property to a tax exempt entity, the Legion, in 1996. (IBM also sold the Legion an adjacent parcel, which has been the subject of other litigation with the Town [see Matter of Legion of Christ v Town of Mount Pleasant, 1 NY3d 406 (2004)].) Before the purchase, the Town warned the Legion that it would not be permitted to use the property at issue here for “a seminary,” and after the purchase the Town began this action. The Town’s complaint sought a judgment “[declaring the use of the property ... for religious purposes to be in violation of the applicable zoning,” but the Town — perhaps influenced by Congress’s passage of the Religious Land Use and Institutionalized Persons Act (42 USC § 2000cc et seq. [RLUIPA]) while the action was pending — has now abandoned its claim that religious use of the property is forbidden. The Town still argues, however, that the Legion is using the property as a college or seminary, and that it may not do so without a special permit.

The Legion has referred to the facility it operates on the property as “the Seminary for Higher Studies” and as “a College of Philosophy and Theology.” It has discarded these terms, however, and now describes the facility as a “conference center” or “training center.” It asserts that its use of the property is not materially different from IBM’s. Apart from converting two rooms into chapels, the Legion has made few physical changes in the building: it uses the same bedrooms, the same rooms for preparing and serving food, the same classrooms, even the same weight room.

Those trained on the property by the Legion include “brothers in formation” — members of the Legion who are studying philosophy as part of their lengthy preparation for the priesthood. These men may study and live on the property for as long as two years. A brother who completes the philosophy course receives what the Legion calls an “ecclesiastical degree,” though the “degrees” are not authorized by the State and are accepted at few, if any, other institutions. The Legion also offers classes of shorter duration for diocesan priests and laypeople; these programs, which could reasonably be called conferences, may be as brief as a week, or a single day. When IBM owned the property, the courses were, apparently, all short-term; the record does not show that any instructional program was longer than six weeks, though people teaching or administering such programs were there for as long as six months at a time.

Supreme Court and the Appellate Division addressed two issues: whether the Legion’s use complies with the Town Code and whether the Town’s interpretation of the Code to prohibit that use violates RLUIPA. Supreme Court ruled in the Legion’s favor on both issues and held that the Legion was entitled to attorneys’ fees; the Appellate Division reversed both rulings and denied attorneys’ fees. We now hold that the Legion’s use is lawful under the Town Code. We do not reach the RLUIPA issue, and we affirm the denial of attorneys’ fees.

Discussion

The Town Code defines the “Permitted Principal Uses” of property in the OB-CE district as follows:

“1. Conference and training facilities to include but not be limited to:
“a. Continuing education activities and facilities.
“b. Classroom space and teaching equipment.
“c. Offices for staff.
“2. Indoor and outdoor physical recreational facilities.
“3. Housing and dining facilities provided that such facilities are not operated as a public hotel or public restaurant as defined in § 218-74E” (Town of Mount Pleasant Code, ch 218, Schedule of Regulations, Residence Districts IIIA.)

The Legion uses the property as the Town Code specifies. It conducts brief programs that could be labeled “[c]onference[s]” and it provides “training” to its brothers in formation and others. Substantially all of its activities consist of “[c]ontinuing education,” and to that end it uses “[c]lassroom space,” “teaching equipment” and “[o]ffices for staff.” It also uses “[i]ndoor and outdoor physical recreational facilities,” and “[h]ousing and dining facilities.” In short, the Town Code definition might almost have been written to describe what the Legion does on the property — and this is unsurprising, for it was written to describe what IBM did there, and the Legion does much the same thing.

The Legion provides religious training and education, while the activities of IBM and its tenants were largely secular, but the Town no longer claims that the Code forbids the Legion’s use on that ground. In arguing that the Legion’s use is significantly different from IBM’s, the Town relies primarily on the duration of the Legion’s residential programs — up to two years, in contrast to the much shorter programs run by IBM and its tenants. The Town contends that an institution offering a two-year course of study is better described as a college or seminary than as a conference and training center.

We reject the Town’s argument. Nothing in the Town Code says or implies that only training programs of relatively short duration are permitted in the OB-CE district. Indeed, by specifically forbidding “hotel or public restaurant” use, the Town showed itself to be worried more about short-term than long-term visitors. We conclude that the property, as used by the Legion, is a conference and training center within the meaning of the Town Code. Whether it could also be called a college or a seminary is irrelevant.

We give a broad interpretation to the term “[conference and training facilities” not only because the Town Code defines the term broadly, but also because a broad reading does not injure any interest of the Town that can legitimately be protected by zoning. The longer duration of the Legion’s programs appears to be completely harmless from the Town’s point of view. The Town does not claim that the Legion’s use of the property presents any traffic, health, safety or similar problem that was not also presented by IBM’s use. Of course, there is one difference that is important to the Town — the Legion, unlike IBM, is tax exempt. But keeping property in taxpaying hands is not a legitimate purpose of zoning.

We therefore hold the Legion’s use permitted under the Town Code. We do not need to, and do not, decide the RLUIPA question addressed by the courts below.

We affirm the Appellate Division’s denial of attorneys’ fees, which may be awarded under 42 USC § 1988 (b) to the prevailing party in an RLUIPA action. We recognize that at times, when a party asserts both state and federal claims and prevails on the former, it may be entitled either to a ruling on its federal claim for purposes of deciding the fee issue or to an award of fees even in the absence of a ruling on the federal claim (Matter of Johnson v Blum, 58 NY2d 454, 458 n 2 [1983]). That rule does not apply here, however. When this action was brought RLUIPA had not even been enacted, and the Legion then had available to it the state-law defense that we have found dispositive. The provision of state law on which this case turns is not a state counterpart to RLUIPA, but a local zoning code. It would distort reality to hold that the Legion is the “prevailing party” in an RLUIPA case.

Accordingly, the order of the Appellate Division should be modified, with costs to the Legion, by granting judgment declaring that the Legion’s use of the property is permitted as of right by the Town Code, and, as so modified, should be affirmed.

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

Order modified, etc.


author: Ciparick, J.

text:
    [850 NE2d 1152, 818 NYS2d 176]
    Automobile Insurance Company of Hartford, Respondent, v Alfred S. Cook, Appellant, and Victoria Pruyn, as Administratrix of the Estate of Richard A. Barber, Deceased, and as Parent and Natural Guardian of Andrew H. Pruyn, an Infant, Respondent.
    Argued and submitted May 3, 2006;
    decided June 8, 2006

      POINTS OF COUNSEL

      Roche, Corrigan, McCoy & Bush, Albany (Robert E Roche of counsel), for appellant.
    I. A review of the decisions in other jurisdictions clearly indicates a move by the courts to adopt a more sensible interpretation of the definitions of “occurrence” and “expected or intended” and allow for self-defense when properly raised by a homeowner. (State Farm Fire & Cas. v Dunlavey, 197 F Supp 2d 183; Allstate Ins. Co. v Takeda, 243 F Supp 2d 1100; Tower Ins. Co., Inc. v Judge, 840 F Supp 679.) II. The State of New York has examined the issue in lower courts but has yet definitively to have the Court of Appeals state its position on whether or not an act of self-defense is an exception to the exclusion clause in the liability policy as urged by respondent here. (Michigan Millers Mut. Ins. Co. v Christopher, 66 AD2d 148; Miller v Continental Ins. Co., 40 NY2d 675; Utica Mut. Ins. Co. v Cherry, 38 NY2d 735; Slayko v Security Mut. Ins. Co., 98 NY2d 289; McGroarty v Great Am. Ins. Co., 36 NY2d 358; Allstate Ins. Co. v Zuk, 78 NY2d 41; Deetjen v Nationwide Mut. Fire Ins. Co., 302 AD2d 350; Frontier Insulation Contrs. v Merchants Mut. Ins. Co., 91 NY2d 169; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640; Barry v Romanosky, 147 AD2d 605.)

      Michael J. Hutter, Albany, and Majewski & Associates, Melville, for Automobile Insurance Company of Hartford, respondent.
    I. Plaintiff may be found as a matter of law to have no duty to defend or indemnify its insured on this summary judgment motion with a showing that there is no possible factual or legal basis upon which it may be concluded that the shooting death of Richard Barber, concededly the result of its insured’s intentional shooting of Barber with the intent to injure him, was caused by an “occurrence,” defined by the policy as an “accident,” and thus within the policy’s liability coverage, and/or was not “expected or intended” by Alfred Cook, and thus excluded from coverage under a policy exclusion. (Allstate Ins. Co. v Mugavero, 79 NY2d 153; Pistolesi v Nationwide Mut. Fire Ins. Co., 223 AD2d 94, 88 NY2d 816; Consolidated Edison Co. of N.Y. v Allstate Ins. Co., 98 NY2d 208; Raymond Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 5 NY3d 157; Caporino v Travelers Ins. Co., 62 NY2d 234; Breed v Insurance Co. of N. Am., 46 NY2d 351; State of New York v Home Indem. Co., 66 NY2d 669; Michaels v City of Buffalo, 85 NY2d 754; New York Cas. Ins. Co. v Ward, 139 AD2d 922; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640.) II. Since plaintiffs proof establishes as a matter of law that no “accident” caused Richard Barber’s bodily injury, as required by the express terms of its policy for coverage, and that the policy’s exclusion for bodily injury “expected or intended” is applicable, no coverage is afforded under its policy. (Jubin v St. Paul Fire & Mar. Ins. Co., 236 AD2d 712; Agoado Realty Corp. v United Intl. Ins. Co., 95 NY2d 141; Miller v Continental Ins. Co., 40 NY2d 675; Northville Indus. Corp. v National Union Fire Ins. Co. of Pittsburgh, Pa., 89 NY2d 621; McGroarty v Great Am. Ins. Co., 36 NY2d 358, 874; Messersmith v American Fid. Co., 232 NY 161; Ward v Security Mut. Ins. Co., 192 AD2d 1000; State Farm Fire & Cas. Co. v Torio, 250 AD2d 833; Allstate Ins. Co. v Ruggiero, 239 AD2d 369; Allstate Ins. Co. v Bostic, 228 AD2d 628.) III. Coverage cannot be created on the basis that Alfred Cook’s intentional shooting of Richard Barber with the intent to injure him was an act of self-defense. (Aromin v State Farm Fire & Cas. Co., 908 F2d 812; Handlebar, Inc. v Utica First Ins. Co., 290 AD2d 633, 98 NY2d 601; Peters v State Farm Fire & Cas. Co., 306 AD2d 817, 100 NY2d 634; Slayko v Security Mut. Ins. Co., 98 NY2d 289; Allstate Ins. Co. v Mugavero, 79 NY2d 153; Pennsylvania Millers Mut. Ins. Co. v Rigo, 256 AD2d 769; Allstate Ins. Co. v Zuk, 78 NY2d 41; Matter of Perry v Blair, 64 AD2d 870; Herndon v City of Ithaca, 43 AD2d 634; State Farm & Cas. Co. v Sanders, 805 F Supp 1453.) IV Plaintiff is entitled to a judgment declaring that it is not obligated to defend and indemnify Alfred Cook in the Pruyn v Cook action. (Pennsylvania Millers Mut. Ins. Co. v Rigo, 256 AD2d 769; Home Mut. Ins. Co. v Lapi, 192 AD2d 927.)

      Tabner, Ryan and Keniry, LLP, Albany (Benjamin F. Neidl and William F. Ryan, Jr., of counsel), for Victoria Pruyn, respondent.
    The trial court was correct to deny the insurer’s motion for summary judgment, and the Appellate Division was in error to reverse, because while defendant’s conduct was tortious, a reasonable insured could have expected the incident to be covered by the policy as an unexpected, unintended “accident.” (Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390; Miller v Continental Ins. Co., 40 NY2d 675; McGroarty v Great Am. Ins. Co., 36 NY2d 358; Fowler v Risedorph Bottling Co., 175 App Div 224; Messersmith v American Fid. Co., 232 NY 161; Lachter v Insurance Co. of N. Am., 145 AD2d 540; Seaboard Sur. Co. v Gillette Co., 64 NY2d 304; Munzer v St. Paul Fire & Mar. Ins. Co., 145 AD2d 193; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640; Slayko v Security Mut. Ins. Co., 98 NY2d 289.)
   OPINION OF THE COURT

Ciparick, J.

The issue in this declaratory judgment action is whether the insurer has a duty to defend its policyholder under his homeowner’s insurance policy in an underlying wrongful death action, resulting from a shooting committed in self-defense. We conclude that the insurer here is obligated to defend under the policy.

On February 20, 2002, Alfred Cook shot and killed Richard Barber inside his home. At the depositions, the witnesses testified that the two men had known each other for many years, but became involved in a dispute relating to their business relationship. Barber, weighing about 360 pounds, was approximately three times Cook’s size and had previously attacked the smaller man, causing injury to his leg. On the morning of February 20, Barber and another man were outside of Cook’s home, hurling objects at the house. They left without further incident, but Barber returned later that day with two other companions. When Cook, who was standing outside his door, saw them approaching, he asked a person visiting him to leave because he expected trouble. He returned inside, locked the door and, anticipating a confrontation, retrieved a .25 caliber handgun from his bedroom.

There was further testimony that the group burst into Cook’s home. The four individuals gathered in the kitchen where Barber began demanding money from Cook while pounding his fists on the kitchen table. Cook, alarmed, drew his gun and demanded that they leave his house. Barber apparently laughed at the small size of the pistol, at which point Cook withdrew to his bedroom for a larger weapon. He picked up a loaded, 12 gauge shotgun and stood in his living room at the far end of his pool table. Cook again ordered them to leave the house. Although Barber started to head toward the door with his companions, he stopped at the opposite end of the pool table, turned to face Cook and told his companions to take anything of value, and that he would meet them outside because he had some business to attend to. When Barber menacingly started advancing toward Cook, Cook warned him that he would shoot if he came any closer. Cook aimed his gun toward the lowest part of Barber’s body that was not obscured by the pool table — his navel. When Barber was about one step away from the barrel of the gun, Cook fired a shot into Barber’s abdomen. Barber died later that day at a hospital.

Cook was indicted for intentional and depraved indifference murder. At trial he raised a justification defense. A jury acquitted him of both murder counts and of the lesser included offenses of manslaughter in the first and second degrees.

The administrator of Barber’s estate, Victoria Pruyn, commenced a wrongful death action against Cook. The first cause of action alleges that “[finjury to the decedent and the decedent’s death were caused by the negligence of the defendant, Alfred S. Cook.” Specifically, the complaint alleges that Cook’s behavior “consisted of negligently playing with a loaded shotgun; negligently pointing that shotgun at the abdomen of the decedent; negligently discharging that shot gun into the decedent’s abdomen; and engaging in unruly behavior at the Defendant’s residence on February 20, 2002.” In a separate cause of action, the complaint alleges that Cook intentionally shot Barber causing Barber’s death. At his examination before trial, Cook testified, “I knew the [shot from the] shotgun would injure Mr. Barber because I had to stop him, but I did not anticipate it killing him.”

Cook sought homeowner’s personal liability coverage from his insurer, the Travelers Insurance Company, appearing in this action as the Automobile Insurance Company of Hartford. Hartford disclaimed coverage explaining that the incident was not an “occurrence” within the meaning of the policy and furthermore that the injury inflicted upon Barber fell within a policy exclusion, as it was “expected or intended” by Cook. The insurer commenced this declaratory judgment action against both Cook and Pruyn for a declaration that it was not obligated to defend or indemnify Cook in the wrongful death action. After depositions, Hartford moved for summary judgment and Cook cross-moved, seeking a declaration that the insurer was required to defend and indemnify him in the underlying tort action.

Supreme Court denied Hartford’s motion and granted Cook’s cross motion to the extent of declaring that the insurer had a duty to provide a defense for Cook in the wrongful death action. The court found that Hartford failed to prove that the incident was not an occurrence covered by the policy or that Cook’s actions were subject to the exclusion for injuries expected or intended by the insured. The court held that the insurer had a duty to defend because the negligence allegations in the complaint could potentially be proven at trial.

The Appellate Division reversed, concluding that since Cook intentionally shot Barber, his actions could not be considered an accident or “occurrence” and, thus, were not covered by the policy (21 AD3d 1155, 1157 [2005]). The Court also noted that the acts came within the policy exclusion for bodily injury “expected or intended” by the insured (id. at 1158). One Justice dissented and voted to affirm, holding that if the negligence claim were established, Cook’s actions would be covered by the policy. This Court granted leave to appeal and we now reverse.

Our inquiry is twofold: whether an “occurrence” is involved that gives rise to policy coverage and, if so, whether it falls within the “expected or intended” injury policy exclusion. As relevant here, the insurance policy defines an “occurrence” as “an accident. . . which results, during the policy period, in . . . bodily injury.” The policy also contains an exclusion for bodily injury “which is expected or intended by any insured.” The policy represents that it will provide a defense and pay — up to the policy limits — the amounts for which the insured is legally liable, “[i]f a claim is made or a suit is brought against any insured for damages because of bodily injury . . . caused by an occurrence to which this coverage applies, even if the claim or suit is false.”

It is well settled that an insurance company’s duty to defend is broader than its duty to indemnify. Indeed, the duty to defend is “exceedingly broad” and an insurer will be called upon to provide a defense whenever the allegations of the complaint “suggest ... a reasonable possibility of coverage” (Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640, 648 [1993]). “If, liberally construed, the claim is within the embrace of the policy, the insurer must come forward to defend its insured no matter how groundless, false or baseless the suit may be” (Ruder & Finn v Seaboard Sur. Co., 52 NY2d 663, 670 [1981]).

The duty remains “even though facts outside the four corners of [the] pleadings indicate that the claim may be meritless or not covered” (Fitzpatrick v American Honda Motor Co., 78 NY2d 61, 63 [1991]). For this reason, when a policy represents that it will provide the insured with a defense, we have said that it actually constitutes “litigation insurance” in addition to liability coverage (see Seaboard Sur. Co. v Gillette Co., 64 NY2d 304, 310 [1984], quoting International Paper Co. v Continental Cas. Co., 35 NY2d 322, 326 [1974]). Thus, an insurer may be required to defend under the contract even though it may not be required to pay once the litigation has run its course.

When an insurer seeks to disclaim coverage on the further basis of an exclusion, as it does here, the insurer will be required to “provide a defense unless it can ‘demonstrate that the allegations of the complaint cast that pleading solely and entirely within the policy exclusions, and, further, that the allegations, in toto, are subject to no other interpretation’ ” (Allstate Ins. Co. v Mugavero, 79 NY2d 153, 159 [1992] [citation omitted]). In addition, exclusions are subject to strict construction and must be read narrowly (see Seaboard, 64 NY2d at 311).

An examination of the wrongful death complaint leads to the conclusion that Cook’s claim is covered by the policy. Among other things, the complaint alleges that Cook negligently caused Barber’s death. If such allegations can be proven, they would fall within the scope of the policy as a covered occurrence. The policy defines an “occurrence” as an accident, and we have previously defined the term “accident,” albeit in a life insuranee policy, “to pertain not only to an unintentional or unexpected event which, if it occurs, will foreseeably bring on death, but equally to an intentional or expected event which unintentionally or unexpectedly has that result” (Miller v Continental Ins. Co., 40 NY2d 675, 678 [1976]). Thus, if Cook accidentally or negligently caused Barber’s death, such event may be considered an “occurrence” within the meaning of the policy and coverage would apply. The factfinder in the underlying action may indeed ultimately reject the notion that Cook negligently caused Barber’s death given the evidence of intentional behavior, but that uncertain outcome is immaterial to the issue raised here — the insurer’s duty to defend in an action where it is alleged that the injury was caused by the negligent conduct of the insured.

Turning to the exclusion — as an allegation of negligence implies an unintentional or unexpected event, Hartford necessarily has failed to demonstrate that the allegations of the complaint are subject to no other interpretation than that Cook “expected or intended” the harm to Barber (compare Mugavero, 79 NY2d 153 [1992] [where the harm caused was inherent in the nature of the acts alleged to be committed by the insured— child sexual abuse — and fell within the homeowners’ insurance policy’s exclusion]). Hartford is thus required to defend Cook in the underlying wrongful death action.

In light of this disposition, it is unnecessary to address the remaining arguments — specifically, whether acts of self-defense are intentional acts precluding coverage under a homeowner’s policy. Suffice it to say that a reasonable insured under these circumstances would have expected coverage under the policy. As to a duty to indemnify, that determination will abide the trial.

Accordingly, the order of the Appellate Division should be reversed, with costs, and the order of Supreme Court should be reinstated.

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

Order reversed, etc.


author: R.S. Smith, J. Read, J.

text:
    [851 NE2d 1135, 818 NYS2d 784]
    In the Matter of Marc Greenberg, Appellant, v New York City Transit Authority, Respondent. Workers’ Compensation Board, Respondent.
    Argued March 28, 2006;
    decided May 4, 2006

      POINTS OF COUNSEL

      Gladstein, Reif & Meginniss, LLP, New York City (Margaret A. Malloy of counsel), for appellant.
    The Appellate Division’s decision is contrary to the plain language of Workers’ Compensation Law § 120, directly conflicts with controlling Court of Appeals precedent, and undermines the purposes of Workers’ Compensation Law § 120. (Matter of Aurecchione v New York State Div. of Human Rights, 98 NY2d 21; Love v State of New York, 78 NY2d 540; Matter of Holcomb v Daily News, 45 NY2d 602; McGrath v Toys “R” Us, Inc., 3 NY3d 421; Lawyers’ Fund for Client Protection of State of N.Y. v Bank Leumi Trust Co. of N.Y., 94 NY2d 398; Prager v New Jersey Fid. & Plate Glass Ins. Co. of Newark, N.J., 245 NY 1; Mohassel v Fenwick, 5 NY3d 44; Matter of Rochester Carting Co. v Levitt, 36 NY2d 264; Adventurers Whitestone Corp. v City of New York, 65 NY2d 83; Guido v State of New York, 187 Misc 2d 647.)

      Foley, Smit, O’Boyle & Weisman, Hempstead (Warren J. Fekett of counsel), for New York City Transit Authority, respondent.
    I. The Appellate Division’s decision after review of the facts and law to affirm the Workers’ Compensation Board’s rejection of prejudgment interest was legally permissible and should therefore be affirmed. (Bello v Roswell Park Cancer Inst., 5 NY3d 170; Matter of Meloni v Goord, 267 AD2d 977; Monessen Southwestern R. Co. v Morgan, 486 US 330; Rodgers v United States, 332 US 371; Matter of Transit Cas. Co., 223 AD2d 488; Matter of National Farmers Org. v Gerace, 66 NY2d 719; Matter of Aurecchione v New York State Div. of Human Rights, 98 NY2d 21; Blake v Califano, 626 F2d 891; Fischer v Adams, 572 F2d 406; Richerson v Jones, 551 F2d 918.) II. It was legally permissible for the Workers’ Compensation Board to decline to entertain an attorneys’ fee application not submitted to the Workers’ Compensation Law Judge.
   OPINION OF THE COURT

R.S. Smith, J.

We hold that an award of damages under Workers’ Compensation Law § 120 to an employee who has been discharged for claiming or attempting to claim workers’ compensation benefits may include predecision interest.

Facts and Procedural History

Claimant was fired by the New York City Transit Authority in 1994, shortly after making a claim for workers’ compensation benefits. The Workers’ Compensation Board found that the firing was retaliatory and so violated Workers’ Compensation Law § 120. Claimant, reinstated to his job in 1997, asked the Board to award him damages, in the form of back pay for the intervening three years. After an inexplicably long delay, a Workers’ Compensation Law Judge held a hearing in 2003, and rendered an award that included $35,469 in interest from the dates claimant’s wages should have been paid to the date of the damages hearing. The Judge also awarded claimant attorneys’ fees.

The Transit Authority appealed to the Workers’ Compensation Board, arguing that the award of interest was not authorized by statute. Claimant defended the Judge’s award, and also sought a supplemental award of attorneys’ fees for work done after the damages hearing. The Board modified the award to delete the provision for interest, finding no “binding legal authority which authorizes prejudgment interest on awards for damages pursuant to WCL Section 120.” The Board rejected claimant’s request for an additional attorneys’ fee.

The Appellate Division affirmed the Board’s decision. We now modify the Appellate Division’s order to reinstate the Workers’ Compensation Law Judge’s award of interest.

Discussion

Workers’ Compensation Law § 120 provides in relevant part:

“It shall be unlawful for any employer or his or her duly authorized agent to discharge or in any other manner discriminate against an employee as to his or her employment because such employee has claimed or attempted to claim compensation from such employer ....
“Upon finding that an employer has violated this section, the board shall make an order that any employee so discriminated against shall be restored to employment or otherwise restored to the position or privileges he or she would have had but for the discrimination and shall be compensated by his or her employer for any loss of compensation arising out of such discrimination together with such fees or allowances for services rendered by an attorney or licensed representative as fixed by the board.”
(Emphasis added.)

The main question here is whether an order under this section that an employee “shall be compensated ... for any loss of compensation” may include predecision interest. We hold that it may.

Two recent cases frame the debate. Claimant relies on Matter of Aurecchione v New York State Div. of Human Rights (98 NY2d 21 [2002]), which held that the State Division of Human Rights has discretion to award predecision interest on back pay awards for employment discrimination under the Human Rights Law (Executive Law art 15). The Transit Authority relies on Matter of Bello v Roswell Park Cancer Inst. (5 NY3d 170 [2005]), which held that back pay awards under Civil Service Law § 77 may not include predecision interest. We recognized in both of these cases that the authority for such interest awards must be found in statutes; we decided that the statute in Aurecchione granted that authority, but that the statute in Bello did not. We conclude that the present case is closer to Aurecchione than to Bello, because Workers’ Compensation Law § 120 is, in relevant ways, more similar to the Human Rights Law than to Civil Service Law § 77.

Section 120 is, like the Human Rights Law, an antidiscrimination statute. And like the Human Rights Law, section 120 “evinces a legislative intent to compensate fully victims of . . . discrimination” (Aurecchione, 98 NY2d at 25). The Human Rights Law provides for the “awarding of compensatory damages” to victims (Executive Law § 297 [4] [c] [iii]). Section 120 uses similar language: a victim “shall be compensated ... for any loss of compensation.” Section 120 also includes other language showing a generalized intention to undo harm done: victims are to be “restored to the position or privileges [they] would have had but for the discrimination.”

Civil Service Law § 77 is a different kind of statute. It provides that an employee fired in violation of the Civil Service Law “shall be entitled to receive and shall receive . . . the salary or compensation which he would have been entitled by law to have received . . . less the amount of any unemployment insurance benefits he may have received.” As we explained in Bello (5 NY3d at 173):

“The statute does not just create a general right to ‘compensation’; it is specific about what a claimant ‘shall be entitled to receive.’ It speaks of ‘salary or compensation’ — indicating that ‘compensation’ refers to bonuses or other nonsalary forms of payment. It provides for the deduction of unemployment insurance benefits. . . . We conclude that a legislature giving such careful attention to the components of a back pay award would have added the words ‘with interest’ if it had intended interest to be awarded.”

Workers’ Compensation Law § 120, by contrast, does create a “general right to ‘compensation.’ ” It does not specifically list what a claimant is entitled to receive, and does not use “compensation” in the narrow sense of nonsalary payment. From the text of section 120, it does not seem that the Legislature that enacted it was “giving . . . careful attention to the components of a back pay award.” It seems rather that the Legislature was making a general statement that victims of discrimination should be made whole.

Two other factors we relied on in Bello are also absent here. Awards under Civil Service Law § 77, unlike those under Workers’ Compensation Law § 120, are not reduced by the amounts claimants earn in other employment — so that Civil Service Law claimants, though they are denied predecision interest, may often receive more than the principal amount of their actual loss (see Bello, 5 NY3d at 173-174). And Civil Service Law § 77 specifically addresses recoveries against the State, raising sovereign immunity concerns that made us hesitant, in Bello, to find an implied right to the recovery of interest (id.).

For these reasons, we hold that predecision interest awards are permissible under Workers’ Compensation Law § 120. Our holding is limited to that section; we by no means suggest that predecision interest should be recoverable on workers’ compensation awards generally. Despite the name of the Workers’ Compensation Law, most of its provisions are designed not to make workers whole for the losses they may have suffered, but to provide for each injury a specified “money allowance” (Workers’ Compensation Law § 2 [6]) that bears no necessary relationship to full compensation. Interest on ordinary workers’ compensation awards is governed by statutes that specifically address the question, and provide for postdecision interest only (Workers’ Compensation Law § 20 [1]; § 24).

The dissent contends that section 20 (1) also governs the availability of interest on awards under section 120 (dissenting op at 145, 146, 148). A reading of section 20 (1) will show, however, that this interpretation is untenable. Section 20 (1), derived from a section of the original Workmen’s Compensation Law enacted in 1913 and amended to include the interest provision in 1925, is explicitly and solely concerned with claims based on a worker’s death or disability. It sets out a procedure for the determination of such claims, beginning with presentation of the claim “[a]t any time after the expiration of the first seven days of disability ... or at any time after the employee’s death.” It makes no reference to claims based on retaliatory discharge or other forms of discrimination. There is simply no way to apply section 20 (1) to claims under section 120, an antidiscrimination statute passed in 1973.

The dissent also suggests that the definition of “compensation” in Workers’ Compensation Law § 2 (6) — “the money allowance payable to an employee or to his dependents as provided for in this chapter” — is applicable to the use of “compensation” in section 120 (dissenting op at 148-149). This suggestion, like the dissent’s interpretation of section 20 (1), cannot be right. If the statutory definition of “compensation” is read into section 120, the statute does not make sense.

Nor does the dissent’s analysis of the legislative history of section 120 persuade us that the section was not designed to make workers whole. Section 120 provides, with seeming redundancy, that a victim of discrimination shall be “compensated . . . for any loss of compensation.” The dissent is no doubt right that the noun, “compensation,” introduced into the statute by a 1987 amendment, was intended as a broader counterpart to the former term, “wages” (dissenting op at 146-148). But the dissent offers no reason to think that the verb, “shall be compensated,” which was contained in the 1973 version of section 120, means anything but what it says. The combination of the noun and the verb, and the language in the statute authorizing equitable relief, show an intention to make victims whole. Nothing in the legislative history cited by the dissent contradicts that intention.

Finally, we reject claimant’s argument that he is entitled to a supplemental attorneys’ fee. The Board had discretion to require, as it did, that any request for a fee — even a prospective request, for work to be performed after the damages hearing — be first presented to the Workers’ Compensation Law Judge.

Accordingly, the order of the Appellate Division should be modified to provide that the Workers’ Compensation Law Judge’s award of $35,469 in interest is reinstated, and as so modified affirmed, with costs to claimant.

Read, J.

(dissenting). Section 20 of the Workers’ Compensation Law specifies that “[e]xcept as provided in section twenty-seven of this article, all awards of the board shall draw simple interest from thirty days after the making thereof’ (Workers’ Compensation Law § 20 [1]). Thus has the Legislature plainly negated the predecision interest for which the majority principally finds warrant in the Human Rights Law and our decision in Matter of Aurecchione v New York State Div. of Human Rights (98 NY2d 21 [2002]). Accordingly, I respectfully dissent. I would affirm the decisions of the Workers’ Compensation Board and the Appellate Division.

Hailed as a “notable measure . . . which will put a great burden on the employer and will launch an experiment in state insurance” (Talley, New York Workmen’s Compensation Act Very Radical, New York Times, Dec. 28, 1913, section 5, at 10), the Workers’ Compensation Law took effect on January 1, 1914. In the intervening years, this important statute has been the object of constant legislative attention and fine-tuning. Indeed, between 1914 and 1961, when former Governor Nelson A. Rockefeller appointed a blue-ribbon committee to review the status of workers’ compensation in New York, the Legislature amended the law a remarkable 560 times (Governor’s Workmen’s Compensation Review Committee, Review of Workmen’s Compensation in New York State, at 19 [Dec. 1962]). Legislative interest has hardly waned in the 45 years since 1961 (see e.g. Omnibus Workers’ Compensation Reform Act of 1996 [L 1996, ch 635]). The result is a complex, integrated and unusually prescriptive statute, which we have historically interpreted by looking solely at its particular language, context and legislative history, even though we have surely sometimes disagreed about the answer yielded by this analysis. In this case, the language, context and legislative history of sections 20 and 120 of the Workers’ Compensation Law support the conclusion reached by the Workers’ Compensation Board and the Appellate Division; namely, that predecision interest is not available under section 120.

Originally, the only provision in the Workers’ Compensation Law addressing interest was section 24, which specified that an award subsequently affirmed by the Appellate Division was payable with interest from the date made (L 1917, ch 705). In 1925, the Legislature established a special committee to investigate alleged delays in the settlement and payment of compensation and death benefits to employees and their dependants under the Workers’ Compensation Law. The committee found that some delays were attributable to the withdrawal of appeals before perfection:

“While there is no actual proof to the effect that appeals have been taken to the courts merely for the purpose of delaying compensation[,] the testimony shows that at least seventy-five percent of the appeals are withdrawn. If an appeal is sustained by the court[,] the award draws interest from the date of the award by the board.[] If an appeal is withdrawn and compensation paid, no interest is added” (1925 NY Legis Doc No. 80, at 8).

To reduce any incentive for unnecessary appeals and thus cut down on delays from this cause, the Committee recommended amending the Workers’ Compensation Law “to provide that awards for compensation should bear interest beginning thirty days after the date of the award. To compute interest beginning at an earlier period in all cases would be impractical” (id.). The Legislature enacted this “simple addition” to section 20 in 1925 (see Comment from NY St Fedn of Labor, Bill Jacket, L 1925, ch 660). In 1939, the Legislature amended section 20 to except awards under section 27 from the direction to pay interest beginning 30 days after the date of the award by the board (see L 1939, ch 937, § 2). This is the only exception to the 30-day rule enacted by the Legislature since 1925.

In 1973, the Legislature added section 120 to the Workers’ Compensation Law. Modeled after an amendment made by Congress to the Longshore and Harbor Workers’ Compensation Act the previous year (see 33 USC § 948a, as added Oct. 27, 1972 by Pub L 92-576, § 19), section 120 made it unlawful for an employer “to discharge or in any other manner discriminate against an employee as to his employment because such employee has claimed or attempted to claim compensation from such employer, or because he has testified or is about to testify” (L 1973, ch 235, § 1) in a workers’ compensation proceeding. The wronged employee’s remedies were limited to restoration to employment and compensation for lost wages. The purpose of this legislation was to “insure[ ] that a claimant can exercise his rights . . . without fear that doing so may endanger the continuity of employment” (Mem of Indus Commr, Bill Jacket, L 1973, ch 235).

Recognizing that section 120 was, in some ways, “not now carefully drawn,” in 1987 the Workers’ Compensation Board recommended amending it (see Mem of State Workers’ Compensation Board, 1987 McKinney’s Session Laws of NY, at 2459). The Legislature subsequently struck the language in section 120 limiting a wronged employee’s remedies to reinstatement and compensation for lost wages, and replaced it with the instruction, which continues to be the law, that:

“any employee [discriminated against in violation of section 120] shall be restored to employment or otherwise restored to the position or privileges he or she would have had but for the discrimination and shall be compensated by his or her employer for any loss of compensation arising out of such discrimination.”

This language was drafted by the Workers’ Compensation Board. The Board explained the revision as necessary because

“[w]hile [section 120] prohibits discrimination other than discharge, it does not provide remedies other than reinstatement and back wages. Thus, if an employee were demoted or transferred, no equitable relief would be possible. If the employee were terminated and lost fringe benefits (e.g. medical insurance) as well as back pay, no compensation for lost benefits would be possible. This legislation would allow the Workers’ Compensation Board to restore the employee discriminated against to employment, and/or to restore the employee to the position or privileges he or she would have had but for the discrimination” (see July 21, 1987 Letter to Governor’s Counsel from General Counsel of Workers’ Compensation Bd, Bill Jacket, L 1987, ch 436).

In sum, section 120 is not a stand-alone statute. It is part of the Workers’ Compensation Law, which in section 20 makes interest payable 30 days after an award by the Board, not from some earlier point in time. If the Legislature had wanted to except section 120 from the generally applicable rule in section 20, it would have done so explicitly as it did in the case of section 27.

Additionally, context and legislative history contradict any suggestion that the Legislature intended section 120 to make predecision interest available to an aggrieved employee. The majority acknowledges that the Workers’ Compensation Law was never designed to make workers whole for losses suffered (majority op at 144). Indeed, “compensation” is defined specifically and narrowly for purposes of the statute generally (see Workers’ Compensation Law § 2 [6]). The majority ignores this, although we have, in the past, interpreted a term in the Workers’ Compensation Law with reference to its meaning in unrelated provisions elsewhere in the statute (see Rubeis v Aqua Club, Inc., 3 NY3d 408 [2004] [whether a brain injury results in “permanent total disability” under Workers’ Compensation Law § 11 must be considered within larger context of Workers’ Compensation Law where customary definition of “disability” generally refers to inability to work]). Because “compensation” does not include predecision interest within the larger context of the Workers’ Compensation Law, the natural inference is that, if the Legislature had intended section 120 to make this uncustomary element of compensation available, it would have said so directly. The Legislature that enacted and amended section 120 could not have anticipated that the courts would imply a right to predecision interest solely from its use of the words “compensation” and “compensated,” and by analogy to the Human Rights Law and Aurecchione, a case decided only a few years ago.

Indeed, section 120’s legislative history strongly supports the Workers’ Compensation Board’s position on this appeal. Notably, the critical language directing that an aggrieved employee “shall be restored to employment or otherwise restored to the position or privileges he or she would have had . . . and shall be compensated . . . for any loss of compensation” was drafted by the Board, and enacted by the Legislature without revision (compare 1987 NY Senate-Assembly Bill S 2702, A 7313 with 1987 NY Senate-Assembly Bill S 2702-A, A 7313-A). The Board explained this wording as intended to fulfill two specific purposes. The first was to restore positions or privileges denied to employees who were discriminated against in some way in their employment, but who did not lose their jobs. For these employees, the remedies in the statute as originally enacted— reinstatement and back pay — were pointless. Second, the Board wanted to make sure that employees who were, in fact, terminated were compensated for any lost benefits in addition to lost wages. These purposes dispel any notion that “compensated” and “compensation” implicitly encompass predecision interest (see Letter to Governor’s Counsel from General Counsel of Workers’ Compensation Bd, supra).

Finally, as the Appellate Division noted, it is highly significant that the Workers’ Compensation Board has consistently taken the position that predecision interest is not an element of the compensation available under section 120 (see 16 AD3d 764, 764-765 [3d Dept 2005], citing Matter of Mount Vernon Hosp., 95 NY WCLR 1197 [1995]). While we usually owe no deference to an administrative agency in matters of statutory interpretation, in this instance the agency actually drafted the relevant statutory language and explained what it meant to accomplish by its choice of words, which the Legislature then enacted without revision.

The majority nonetheless holds that “predecision interest awards are permissible under Workers’ Compensation Law § 120” (majority op at 143) principally by analogy to the Human Rights Law and our decision in Aurecchione. In Aurecchione, we decided that the State Division of Human Rights has discretion to award predetermination interest on back pay awards for employment discrimination by a private employer even though the statute makes no specific reference to this remedy. Our decision was based on two grounds, both absent here. First, we observed that “[t]he remedial nature of the [Human Rights Law] evinces a legislative intent to compensate fully victims of employment discrimination” (Aurecchione, 98 NY2d at 25), and that, concomitantly, Executive Law § 300 “explicitly mandated” a “liberal reading of the statute ... to effectuate [its] intent” (id. at 26). By contrast, the Legislature has expressed no similar intention to make workers whole under the Workers’ Compensation Law generally or section 120 in particular; the Legislature has by no means and nowhere enjoined the courts to give a “liberal reading” to the detailed and often heavily negotiated provisions of the Workers’ Compensation Law.

Second, we noted the similarities between the Human Rights Law and its federal counterpart, title VII of the Civil Rights Act of 1964 (42 USC § 2000e et seq.), which the United States Supreme Court has interpreted to permit predetermination interest despite the absence of any reference to this relief in the statutory text, and our policy “to resolve federal and state employment discrimination claims consistently” (Aurecchione, 98 NY2d at 25; see also McGrath v Toys “R” Us, Inc., 3 NY3d 421, 429 [2004] [“Where our state and local civil rights statutes are substantively and textually similar to their federal counterparts, our Court has generally interpreted them consistently with federal precedent”], citing Aurecchione; Forrest v Jewish Guild for the Blind, 3 NY3d 295 [2004]; Rainer N. Mittl, Ophthalmologist, P.C. v New York State Div. of Human Rights, 100 NY2d 326 [2003]; and Ferrante v American Lung Assn., 90 NY2d 623 [1997]). The Workers’ Compensation Law is, of course, not a civil rights statute, and has no federal analogue.

Two final points merit mentioning. Section 120 states that an employee “shall be compensated . . . for any loss of compensation” (emphasis added). Consequently, if the words “compensated” and “compensation” implicitly comprehend predecision interest, the Board presumably has no discretion to deny an aggrieved employee this relief. The majority fudges this issue, creating unnecessary uncertainty. The majority never explains whether an award of predecision interest is mandatory or whether the Board simply abused its discretion by not awarding predecision interest in this instance.

Finally, the majority remarks upon the “inexplicably long delay” in awarding back pay in this case (see majority op at 141). There is no doubt that the seven-year time lag between claimant’s reinstatement and the Board’s decision with respect to his back pay award seems egregious. The record does not disclose what caused this hiatus, although there is surely no reason to lay the blame on claimant. We also have no way to know whether the delay here was atypical or commonplace. In any event, that this claimant may have been treated unfairly does not give us license to “rewrite the statute to achieve more ‘fairness’ than the Legislature chose to enact” (Matter of Bello v Roswell Park Cancer Inst., 5 NY3d 170, 173 [2005]).

Chief Judge Kaye and Judges G.B. Smith, Ciparick and Rosenblatt concur with Judge R.S. Smith; Judge Read dissents in a separate opinion in which Judge Graffeo concurs.

Order modified, etc.

      . At that time, the “board” was the Industrial Board of the New York State Department of Labor. The Workers’ Compensation Board took over the administration of the Workers’ Compensation Law from the Industrial Board in 1945 (see Workers’ Compensation Law § 154; Minkowitz, Practice Commentaries, McKinneys Cons Laws of NY, Book 64, Workers’ Compensation Law § 154, at 397).

      . Section 27 of the Workers’ Compensation Law allows the Board to permit or require an employer or its carrier to pay the present value of certain kinds of awards into an aggregate trust fund established by that provision. In 1939, the Legislature amended section 27 to specify when and how and at what rate interest was payable in the event of a review or appeal of any such award the value of which had not been paid into the fund (see L 1939, ch 937, §1).

      . Section 120 also authorized the Board to impose a penalty between $100 and $500 against an employer in violation of its provisions. The employer is individually hable to pay the penalty.


author: Rosenblatt, J.

text:
    [851 NE2d 1149, 818 NYS2d 798]
    Hoffend & Sons, Inc., Appellant, v Rose & Kiernan, Inc., et al., Respondents.
    Argued April 26, 2006;
    decided June 8, 2006

      POINTS OF COUNSEL

      Hiscock & Barclay, LLP, Rochester (Anthony J. Piazza, Joseph A. Wilson and Paul A. Sanders of counsel), for appellant.
    I. A policyholder’s receipt of an insurance policy does not immunize a broker from claims of negligence. (Murphy v Kuhn, 90 NY2d 266; Port Clyde Foods, Inc. v Holiday Syrups, Inc., 563 F Supp 893; Blonsky v Allstate Ins. Co., 128 Misc 2d 981; Hesse v Speece, 278 AD2d 368; Shenorock Shore Club v Rollins Agency, 270 AD2d 330; Kimmell v Schaefer, 89 NY2d 257; Catalanotto v Commercial Mut. Ins. Co., 285 AD2d 788, 97 NY2d 604; Israelson v Williams, 166 App Div 25, 215 NY 684; Evvtex Co., Inc. v Hartley Cooper Assoc. Ltd., 911 F Supp 732; Santaniello v Interboro Mut. Indem. Ins. Co., 267 AD2d 372.) II. The existence of the insurance broker’s written insurance proposal and summary of insurance rebuts any preclusive presumptive knowledge of the terms of the policy. (Laconte v Bashwinger Ins. Agency, 305 AD2d 845; Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736; Arthur Glick Truck Sales v Spadaccia-Ryan-Haas, Inc., 290 AD2d 780; Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73; Murphy v Kuhn, 90 NY2d 266; Bell v O’Leary, 744 F2d 1370; Chase’s Cigar Store v Stam Agency, 281 AD2d 911; Nicholas J. Masterpol, Inc. v Travelers Ins. Cos., 273 AD2d 817; American Motorists Ins. Co. v Salvatore, 102 AD2d 342.)

      Lustig & Brown, LLP, Buffalo {R. Scott Atwater, James C. Keidel, Jonathan Schapp and Randolph E. Sarnacki of counsel), for respondents.
    I. The terms of the Travelers policy are binding on Hoffend & Sons, Inc. (Metzger v Aetna Ins. Co., 227 NY 411; Fiore v Oakwood Plaza Shopping Ctr., 78 NY2d 572; Gillman v Chase Manhattan Bank, 73 NY2d 1; Matter of Level Export Corp. [Wolz, Aiken & Co.], 305 NY 82; Royal Indem. Co.

      v Heller, 256 NY 322; Chase’s Cigar Store v Stam Agency, 281 AD2d 911; Nicholas J. Masterpol, Inc. v Travelers Ins. Cos., 273 AD2d 817; Laconte v Bashwinger Ins. Agency, 305 AD2d 845; Busker on Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376; M & E Mfg. Co. v Frank H. Reis, Inc., 258 AD2d 9.) II. Rose & Kiernan, Inc., had no duty to procure coverage for appellant’s loss because no specific request for coverage was made at any time. (Murphy v Kuhn, 90 NY2d 266; Chase Scientific Research v NIA Group, 96 NY2d 20; Chaim v Benedict, 216 AD2d 347; Hjemdahl-Monsen v Faulkner, 204 AD2d 516; Wied v New York Cent. Mut. Fire Ins. Co., 208 AD2d 1132; Capital Mercury Shirt Corp. v Arkwright Mut. Ins. Co., 195 AD2d 320; Rogers v Urbanke, 194 AD2d 1024; Harnish v Naples & Assoc., 181 AD2d 1012; Rotanelli v Madden, 172 AD2d 815, 79 NY2d 754; Erwig v Cook Agency, 173 AD2d 439.) III. There is no evidence in the record of a special relationship between appellant and Rose & Kiernan, Inc. (Murphy v Kuhn, 90 NY2d 266; W. Joseph McPhillips, Inc. v Ellis, 8 AD3d 782; Coventry Coating Corp. v Verlan Fire Ins. Co., 303 AD2d 164; Sutton Park Dev. Corp. Trading Co. v Guerin & Guerin Agency, 297 AD2d 430; Busker on Roof Ltd. Partnership Co. v Warrington, 283 AD2d 376; Catalanotto v Commercial Mut. Ins. Co., 285 AD2d 788, 97 NY2d 604; Chase’s Cigar Store v Stam Agency, 281 AD2d 911; State Ins. Fund v Anderson Trucking, 281 AD2d 838, 97 NY2d 606; Damask Inc. v CNA Ins. Co., 269 AD2d 733; Ambrosino v Exchange Ins. Co., 265 AD2d 627.) IV The Appellate Division did not abrogate the common-law rule of Murphy v Kuhn (90 NY2d 266 [1997]) by applying the legal presumption that an insured which received its policy prior to the loss is charged with conclusive presumptive knowledge of the terms and conditions of its policy. (Nicholas J. Masterpol, Inc. v Travelers Ins. Cos., 273 AD2d 817; L.C.E.L. Collectibles v American Ins. Co., 228 AD2d 196; McGarr v Guardian Life Ins. Co. of Am., 19 AD3d 254.) V The cases relied upon by appellant are distinguishable and inapplicable. (Laconte v Bashwinger Ins. Agency, 305 AD2d 845; Arthur Glick Truck Sales v SpadacciaRyan-Haas, Inc., 290 AD2d 780; Baseball Off. of Commr. v Marsh & McLennan, 295 AD2d 73; Chase Scientific Research v NIA Group, 96 NY2d 20; Manes Org. v Meadowbrook-Richman, Inc., 2 AD3d 292; Bell v O’Leary, 744 F2d 1370; Kyes v Northbrook Prop. & Cas. Ins. Co., 278 AD2d 736.) VI. Cases in other jurisdictions not applying New York law should be disregarded.
   OPINION OF THE COURT

Rosenblatt, J.

The appeal before us involves a suit by a policyholder against its insurance broker, contending that the broker did not obtain a policy that would have covered the loss involved. We hold that, as a matter of law, the policyholder did not establish that it made a specific request for the coverage in question or that it had a special relationship with the broker. Accordingly, we affirm the Appellate Division’s dismissal of the complaint, although for different reasons.

Plaintiff Hoffend & Sons, Inc. is an Ontario County firm that does design and construction work for theater stages. Defendant Rose & Kiernan, Inc. (R & K) was Hoffend’s insurance brokerage firm and defendant Mark Nickel’s employer.

On December 11, 1998, R & K gave Hoffend a written proposal for insurance coverage for one year starting December 12, 1998. The proposal included descriptions of two policies relevant to this appeal. One was a “Blanket Installation Floater,” or builders’ risk policy, provided by Travelers Indemnity Co. of Illinois, to cover property damage to domestic construction projects generally. The second was a Great Northern “Foreign Liability Exporters’ Package Policy,” to cover general liability, non-owned automobile coverage and workers’ compensation for foreign projects. It did not cover property damage incurred during construction abroad.

On December 22, Ruth Abate of R & K sent a letter to Dan DiPofi, Hoffend’s chief financial officer, stating that the Travelers builders’ risk policy would cover only property damage arising out of domestic projects. Foreign projects, she pointed out, should be discussed on a project-by-project basis.

The loss in question arose out of a foreign project. On February 8, 1999, Hoffend entered into a contract with an Argentine contractor, ORMAS, for a construction project in La Plata, Argentina. Hoffend was the subcontractor, providing the Argentine firm with materials, engineering and design expertise, as well as supervision. Donald Hoffend, a Hoffend principal, claims that he and R & K’s Mark Nickel discussed the project at a December 11,1998 meeting and that he made it clear to Nickel that the project should be “covered.” Under the contract with ORMAS, Hoffend was obligated to acquire insurance for labor-related accidents, which was covered by the Great Northern exporters’ package policy. The ORMAS contract, however, made no mention of builders’ insurance to cover property damage— the type of loss involved here.

In December 1999, R & K gave Hoffend a written insurance proposal for the period from December 12, 1999 to December 12, 2000, which included the date of the loss in question. The coverage was to be essentially the same as the previous year, but the proposal did not specifically state that foreign coverage under the Travelers blanket installation floater would still have to be negotiated on a project-by-project basis. Hoffend’s Dan DiPofi testified that to simplify the bonding process he wanted to show R & K (who also handled the bonding) that most of Hoffend’s La Plata work would take place in the United States. DiPofi did not recall anyone at R & K stating that the project would be covered for the type of loss involved here.

R & K’s Ruth Abate also testified that under Hoffend’s contract with ORMAS, the latter was to be responsible for the builders’ risk insurance. The Travelers builders’ risk policy clearly states that it only covered property in the United States, Puerto Rico and Canada. After the policy was issued, DiPofi and Donald Hoffend read it and did not contact R & K with any questions or changes.

The accident took place on October 5, 2000, when a lighting bridge at the project collapsed, damaging Hoffend’s work and causing consequential damage. Hoffend filed claims with both Travelers and Great Northern. With a reservation of rights, Great Northern agreed to defend and indemnify Hoffend against third-party liability. Travelers disclaimed, citing the territorial limitation in its policy. As a result, the property damage in Argentina was not covered by either policy.

Hoffend seeks to impose liability on Nickel and R & K for having failed to acquire the coverage that Hoffend claims to have specifically requested, namely coverage for foreign projects under the Travelers builders’ risk policy. Hoffend also asserts that it had a special relationship with Nickel, who reviewed Hoffend’s operations, provided advice regarding insurance, bonding, banking, contracts and product development, and aided Hoffend in creating its business plan and corporate information statement. That special relationship, Hoffend argues, imposed on R & K a continuing duty to advise and guide Hoffend, obligating R & K to procure the additional coverage that would have included the loss in question.

The Appellate Division found questions of fact as to whether Hoffend had requested the specific coverage at issue, and whether it had a special relationship with Nickel. The Court dismissed the complaint, however, because Hoffend had received the policy and was therefore charged with knowledge of its contents, thus precluding a cause of action for negligence or breach of contract against R & K and Nickel.

We see no question of fact as to either of Hoffend’s contentions. The record shows that Donald Hoffend’s recollection of events was vague at best, and in light of other proof in the record fails to raise a question of fact as to a request for the specific coverage involved. He admitted that he could not remember asking for additional coverage for any specific project at any of the annual meetings with R & K. Donald Hoffend did not identify specific coverage obtained for any individual project and could not remember any specific conversations on the subject. Moreover, he could provide no details of discussion between the December 1998 meeting regarding the insurance proposal and the February 1999 execution of the ORMAS contract, nor could he say if Nickel had assured him as to specific coverage for any aspect of the Argentine project.

On the other hand, DiPofi recalled telling R & K that Hoffend would only be a supplier for the Argentine firm and not involved in the installation. He could not remember ever asking R & K for full coverage for all losses related to the project. Further, he stated that nobody at R & K had ever represented that the Travelers policy would cover any property losses abroad related to the project.

R & K made it clear to Hoffend that foreign projects would not be covered under the Travelers policy and that coverage of that type would have to be negotiated case by case. In R & K’s December 22, 1998 letter to Hoffend, Abate emphasized that the relevant policy would “cover [Hoffend’s] U.S. projects only” and that foreign coverage remained open for discussion. In the face of this unambiguous writing, Donald Hoffend’s assertions as to what occurred at later meetings are too vague to establish a specific request for coverage of the particular risk involved. His recollection “that we are covered” is insufficient to impose liability on R & K.

Murphy v Kuhn (90 NY2d 266 [1997]) is on point. There, we held that a broker has a common-law duty either to obtain the coverage that a customer specifically requests or to inform the customer of an inability to do so. Although Hoffend contends it made a request sufficiently specific to trigger that duty, the record does not support its assertion. A general request for coverage will not satisfy the requirement of a specific request for a certain type of coverage.

Moreover, the broker in Murphy handled the policyholder’s personal insurance needs for 13 years and served as the company’s insurance broker for over three decades. We held there was no special relationship in that case and we decline to hold that one exists here. In this case, the services provided by Nickel in his capacity as an E & K employee did not rise to the level of a special relationship. Hoffend, a sophisticated commercial entity, did not compensate R & K for its insurance advice apart from its payment of premiums, nor did it delegate its insurance decision-making responsibility to R & K. In short, as in any ordinary broker-client relationship, Hoffend told R & K in general what insurance Hoffend had decided to purchase. It did not ask R & K what that insurance should be.

Lastly, in light of our holdings on the specific request and special relationship issues, we need not consider whether, as the Appellate Division held, Hoffend was barred from recovery because, having received and had an opportunity to read the policy, it requested no changes in it.

Accordingly, the order of the Appellate Division should be affirmed, insofar as appealed from, with costs.

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

Order, insofar as appealed from, affirmed, with costs.