text:
    [832 NE2d 23, 799 NYS2d 167]
    Town of Concord, Respondent, v Henry Duwe, Appellant.
    Decided May 10, 2005

      APPEARANCES OF COUNSEL

      Harris Beach LLP, Buffalo (Alice J. Kryzan of counsel), for appellant.

      Hodgson Russ LLP, Buffalo (Daniel A. Spitzer and Jill L. Yonkers of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the County Court should be affirmed.

Defendant occupies property in the town of Concord zoned for residential-agricultural use. In the fall of 2000, having learned that defendant intended to operate a commercial composting facility on the premises, the Town Compliance Enforcement Officer (CEO) served defendant with a letter declaring that the proposed use violated various Town ordinances. Defendant unsuccessfully appealed to the local Zoning Board, claiming that his composting was within the zoning ordinance’s definition of agricultural use of property and, alternatively, requesting a variance. After the passage of several months, defendant’s counsel notified the Town that defendant intended to initiate a commercial “mulching” operation using tree bark, and in May 2001 defendant purchased nearly $7,000 worth of tree bark from a Pennsylvania lumber company.

The Town then took both civil and criminal enforcement actions—seeking injunctive relief in Supreme Court, and separately charging defendant with criminal violations of seven sections of the Town’s ordinances. Supreme Court denied the Town’s petition for an injunction, but in Town Court defendant was tried and convicted of having violated four local ordinances. County Court modified Town Court’s order, reversing one of defendant’s convictions, but affirming his two convictions under the recycling ordinance (Town of Concord Code [Recycling Ordinance] § 109-4 [A], [B]) and his conviction under the zoning ordinance (Town Code [Zoning Ordinance] § 150-11 [A]). We now affirm.

Defendant argues first, that the Legislature preempted the field of solid waste management and, because the Town’s ordinances are inconsistent with the Solid Waste Management Act, they are invalid; second, that the Town’s ordinances are unconstitutionally vague; and third, that the ruling on the preliminary injunction established the law of the case, collaterally estopping Town Court from considering the issue.

First, as to preemption, in 1988 the Legislature enacted the Solid Waste Management Act, which is codified in various statutory sections, including Environmental Conservation Law article 27. The Solid Waste Management Act, which empowers local governments to adopt ordinances that will achieve the objectives of that law, relied on the ECL’s preexisting definition of solid waste: “ ‘Solid waste’ means all . . . substances discarded or rejected as being spent, useless, worthless or in excess to the owners at the time of such discard or rejection, . . . including but not limited to . . . industrial and commercial waste” (ECL 27-0701). According to another section of article 27, also enacted prior to the Solid Waste Management Act, nothing in the state legislation regarding management of solid waste “shall preclude the right of any [local government] to adopt local. . . ordinances” so long as the local legislation will “comply with at least the minimum applicable requirements set forth in” the legislation (ECL 27-0711). Thus, local laws governing municipal solid waste management broader than—but consistent with—the state legislation are explicitly permitted by the Environmental Conservation Law.

Defendant was convicted under the Town’s recycling ordinances of accumulating and storing municipal solid waste on his property, as municipal solid waste is defined in the local ordinance (including, but not limited to, “garbage, refuse and other discarded solid materials . . . resulting from industrial, commercial and agricultural operations and from community activities” [Town Code (Recycling Ordinance) § 109-3]).

Contrary to defendant’s contention, the Town’s definition of solid waste is not in any sense inconsistent with the Solid Waste Management Act. Further, the State did not intend to preempt this field, and has explicitly delegated to municipalities broad powers to manage their own waste problems. Those sections of the Solid Waste Management Act absorbed into the Environmental Conservation Law offer no suggestion that they should so overtake the field as to preempt local legislation. In Monroe-Livingston Sanitary Landfill v Town of Caledonia (51 NY2d 679, 683-684 [1980]), we held that the State had not preempted the field of waste management through the solid waste disposal provisions that then existed in the Environmental Conservation Law. In 1988, eight years after our decision in Monroe-Livingston, the Legislature added the Solid Waste Management Act to the Environmental Conservation Law. Had the Legislature intended to preempt the local regulation of solid waste management, it could have done so in the 1988 Act. The Legislature’s silence in this regard is continuing assurance that the State has not preempted local legislation of issues related to municipal solid waste management.

Because defendant was purchasing the unused tree bark from a commercial lumber operation and storing it on his property for an extended period of time with the intent to resell it as mulch, he was—as the lower courts found—in violation of the Town’s recycling ordinances (see Town Code [Recycling Ordinance] § 109-4 [A], [B]).

Second, as to defendant’s claims that the statutes under which he was convicted were unconstitutionally vague, defendant—given the Town CEO’s letter and defendant’s appeal to the Zoning Board—was on actual notice both that the Town considered the tree bark he was purchasing a municipal solid waste, and of the purported illegality of his mulching operation. Having been reasonably apprised that the operation—purchasing, processing and storing a commercial byproduct—was illegal before he began the operation, his as-applied vagueness challenge to the Recycling Ordinance is without merit. Similarly, defendant had actual notice that the Town considered his mulching operation an impermissible use of his property under the local zoning law (Town Code [Zoning Ordinance] § 150-11 [A]). Again, the Town’s CEO ticketed defendant for his use, notifying him that his proposed composting operation, using mostly the same raw materials he also proposed to use in his mulching facility, was neither residential nor agricultural—which charge he appealed and from which he sought a variance—thereby assuring this Court that defendant was on actual notice of the purported criminality of his conduct.

Having determined that defendant’s as-applied challenges to the recycling and zoning laws are without merit, “the facial validity of the [ordinances] is confirmed. . . . That is so because, in rejecting the as-applied challenge, [we] . . . have necessarily concluded that there is at least one person—the defendant—to whom the [ordinances] may be applied constitutionally’ ’ (People v Stuart, 100 NY2d 412, 422-423 [2003]). Of course, “[a] defendant on notice may indeed challenge the statute facially where it is so vague that it leaves the police with arbitrary rather than enforceable standards in every application” (id. at 423 n 9 [emphasis added]). Here, however, the local ordinance was not so vague as to permit or encourage arbitrary or discriminatory enforcement in every case. Therefore, defendant’s facial vagueness challenge fails as well.

Finally, mere denial of the motion for a preliminary injunction did not constitute the law of the case or an adjudication on the merits (see Van Wagner Adv. Corp. v S & M Enters., 67 NY2d 186, 190 n 1 [1986]). Thus, Supreme Court’s order denying the Town’s application for preliminary relief enjoining defendant from operating his mulching facility did not have preclusive effect on the ongoing criminal prosecution.

Defendant’s remaining contentions likewise lack merit.

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

Order affirmed in a memorandum.

      . In a letter to the Department of Environmental Conservation, defendant estimated that his facility would use about 3,000 cubic yards of tree hark annually. According to the defendant’s trial witness, the operation would involve 40 to 60 tractor-trailer loads of tree bark per month.

      . Having determined that the Legislature did not preempt the field of solid waste management, we will not import the exceptions to solid waste set forth in the State’s enabling regulations as “beneficial use determinations” (6 NYCRR 360-1.15 [b] [3]). We note, however, that the beneficial use determination upon which defendant asks us to rely exempts wood bark when mulched “at a compost facility operated in compliance with Subpart 360-5 of this Part.” Defendant presented no evidence that his facility complied with this regulation.


source: Caselaw Access Project

license: Public Domain

text:
    [831 NE2d 965, 798 NYS2d 720]
    In the Matter of Sanel V., a Child Alleged to be Abused and Neglected. Administration for Children’s Services, Respondent; Sefija V., Respondent; Murdija V., Appellant. (Proceeding No. 1.) (And Another Related Proceeding.) (Proceeding No. 2.)
    Decided May 10, 2005

      APPEARANCES OF COUNSEL

      Carol L. Kahn, New York City, for appellant.

      Michael A. Cardozo, Corporation Counsel, New %rk City (Deborah A. Brenner of counsel), for Administration for Children’s Services, respondent.
   OPINION OF THE COURT

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order, insofar as appealed from, reversed, with costs, and petition against Murdija V. dismissed in its entirety. As the presentment agency correctly concedes, Family Court’s finding that Murdija V neglected her son, Sanel V, is not supported by legally sufficient evidence.

Concur: Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith.


text:
    [832 NE2d 22, 799 NYS2d 166]
    The People of the State of New York, Respondent, v Lewis Hill, Appellant.
    Decided May 10, 2005
    APPEARANCES OF COUNSEL

      Center for Appellate Litigation, New York City (Jan Hoth of counsel), for appellant.

      Robert T Johnson, District Attorney, Bronx (Allen H. Saperstein of counsel), for respondent.
   OPINION OF THE COURT

Memorandum.

The order of the Appellate Division should be affirmed.

Contrary to defendant’s claims, the trial court’s preclusion of defendant’s expert from conducting a psychiatric examination in support of defendant’s insanity defense (CPL 250.10 [1] [a]) to a second degree murder charge did not constitute an abuse of discretion. Defendant did not request the examination or announce his intention to pursue an insanity defense until the start of jury selection, having previously stated that, for tactical reasons, he would not do so. Under CPL 250.10 (2), the insanity defense is barred unless timely notice is given to prevent detrimental surprise to the prosecution (see People v Almonor, 93 NY2d 571, 581 [1999]). Defendant’s untimely notice thwarts CPL 250.10’s intended promotion of procedural order, proper notification and adversarial examination (see id. at 577-578). Under these facts, the trial court acted within its discretion in precluding the expert examination.

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

On review of submissions pursuant to section 500.4 of the Rules of the Court of Appeals (22 NYCRR 500.4), order affirmed in a memorandum.


text:
    Ronald Anderson, Plaintiff, and Angel Cordero, Appellant, v W. Theodore Hill et al., Respondents.
    Submitted March 28, 2005;
    decided May 10, 2005
   Motion, insofar as it seeks leave to appeal from the Appellate Division order denying reargument or, in the alternative, leave to appeal to the Court of Appeals, dismissed upon the ground that such order does not finally determine the action within the meaning of the Constitution; motion for leave to appeal otherwise denied.


text:
    J. Sackaris & Sons, Inc., Respondent, v Terra Firma Construction Management & General Contracting, LLC, Defendant and Third-Party Plaintiff-Appellant, United States Fidelity and Guaranty Company, Also Known as St. Paul Fire & Marine Insurance Company, Respondent, et al., Defendants. Breger-Terjesen Associates et al., Third-Party Defendants-Respondents.
    Submitted May 2, 2005;
    decided May 10, 2005
   Motion for leave to appeal denied. Motion for a stay dismissed as academic.


text:
    K., Appellant, v B., Respondent.
    Submitted March 28, 2005;
    decided May 10, 2005
   Motion for reconsideration of this Court’s February 15, 2005 dismissal order [see 4 NY3d 776] denied. Motion for leave to appeal denied.


text:
    In the Matter of Dale K. Little, Appellant, v Brion D. Travis, as Chair of the New York State Board of Parole, Respondent.
    Submitted March 14, 2005;
    decided May 10, 2005
   On the Court’s own motion, appeal dismissed, without costs, upon the ground that the issues presented have become moot. Motion for poor person relief dismissed as academic.


text:
    In the Matter of Robin L. Norwood, Respondent, v James P. Capone, Appellant.
    Submitted May 2, 2005;
    decided May 10, 2005
   Appeal dismissed, without costs, by the Court of Appeals, sua sponte, upon the ground that no appeal lies as of right from the unanimous order of the Appellate Division absent the direct involvement of a substantial constitutional question (CPLR 5601).


text:
    NYCTL 1998-2 Trust, et al., Respondents, v Isaac Levin, Appellant, et al., Defendants.
    Submitted April 4, 2005;
    decided May 10, 2005
   Motion, insofar as it seeks leave to appeal from that portion of the Appellate Division order that dismissed the appeal from Supreme Court’s May 2003 order, dismissed upon the ground that no appeal lies from the Appellate Division order dismissing the appeal to that Court from the Supreme Court order entered upon default (see CPLR 5511); motion for leave to appeal otherwise dismissed upon the ground that the remaining portion of the Appellate Division order does not finally determine the action within the meaning of the Constitution. Motion for a stay dismissed as academic.


text:
    The People of the State of New York, Respondent, v John Taylor, Appellant.
    Submitted May 9, 2005;
    decided May 10, 2005
   July 5, 2005 is set as the date for appellant to file a periodic progress report. Appellant shall file additional periodic progress reports every two months thereafter until the filing of appellant’s reply brief. Respondent shall file a periodic progress report on July 5, 2006.

On or before April 3, 2006, appellant shall file 15 copies of a brief and of the issue identification statement required by section 510.8 (c) of the Rules of the Court of Appeals in Capital Cases (22 NYCRR 510.8 [c]), with proof of service.

June 5, 2006 is set as the date by which all motions for amicus curiae relief must be noticed to be heard. All such motions must conform to section 510.12 (c) of the Rules of the Court of Appeals in Capital Cases (22 NYCRR 510.12 [c]).

On or before September 5, 2006, respondent shall file 15 copies of a brief responding to appellant and, as appropriate, amici curiae, with proof of service.

April 3, 2006 is set as the date that the People shall file one copy of all transcripts and documents concerning any grand jury testimony or evidence and any decision attendant thereto.

On or before November 6, 2006, appellant shall file 15 copies of a reply brief which shall also respond, as appropriate, to amici curiae, with proof of service.

Pursuant to section 510.1 (b) of the Rules of the Court of Appeals in Capital Cases (22 NYCRR 510.1 [b]), the parties and each amicus curiae shall serve and file the requisite number of copies of a companion CD-ROM brief within 20 days after the filing of the printed version of the brief.

Issues regarding the proportionality or excessiveness of the sentence shall not be briefed by the parties to the appeal or any movant seeking amicus curiae relief until so directed by the Court of Appeals.


text:
    The People of the State of New York ex rel. Michael Milonopoulos, Appellant, v Michael Rabideau, as Superintendent of Groveland Correctional Facility, Respondent.
    Submitted March 28, 2005;
    decided May 10, 2005
   On the Court’s own motion, appeal transferred, without costs, to the Appellate Division, Fourth Department, upon the ground that a direct appeal does not lie when questions other than the constitutional validity of a statutory provision are involved (NY Const, art VI, § 3 [b] [2]; § 5 [b]; CPLR 5601 [b] [2]). Motion for poor person relief dismissed as academic.


text:
    [832 NE2d 41, 799 NYS2d 185]
    In the Matter of Michael J. Garson.
    Decided May 20, 2005
   OPINION OF THE COURT

On the Court’s own motion, it is determined that Honorable Michael J. Garson is suspended, with pay, effective immediately, from his office of Justice of the Supreme Court of the State of New York, Second Judicial District, pursuant to New York State Constitution, article VI, § 22 and Judiciary Law § 44 (8).

Concur: Chief Judge Kaye and Judges G.B. Smith, Ciparick, Rosenblatt, Graffeo, Read and R.S. Smith.


author: Read, J.

text:
    [831 NE2d 960, 798 NYS2d 715]
    Deborah Buchholz, Individually and as Executrix of Douglas Buchholz, Deceased, Appellant, v Trump 767 Fifth Avenue, LLC, Respondent.
    Argued May 3, 2005;
    decided June 9, 2005

      POINTS OF COUNSEL

      Kramer, Dillof, Livingston & Moore, New York City (Matthew Gaier and Norman Bard of counsel), for appellant.
    I. Summary judgment is improper because defendant failed to demonstrate the absence of issues of fact with respect to common-law negligence, proximate causation or a violation of the Building Code. (Ugarriza v Schmieder, 46 NY2d 471; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Giuffrida v Citibank Corp., 100 NY2d 72; Lesocovich v 180 Madison Ave. Corp., 81 NY2d 982; Alvarez v Prospect Hosp., 68 NY2d 320; Zuckerman v City of New York, 49 NY2d 557; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851; Westmount Inti. Hotels v Sear-Brown Assoc., 65 NY2d 618; Borough Hall-Oxford Tobacco Corp. v Central Off. Alarm Co., 35 AD2d 523.) II. The evidence submitted by plaintiff establishes issues of fact with respect to defendant’s negligence at common law and causation, which require that defendant’s motion be denied on the issue of common-law negligence. (Kellman v 45 Tiemann Assoc., 87 NY2d 871; McCummings v New York City Tr. Auth., 81 NY2d 923; Atkins v Glens Falls City School Dist., 53 NY2d 325; Ugarriza v Schmieder, 46 NY2d 471; Basso v Miller, 40 NY2d 233; Caldwell v Village of Island Park, 304 NY 268; Andre v Pomeroy, 35 NY2d 361; Gordon v City of New York, 70 NY2d 839; Danielenko v Kinney Rent A Car, 57 NY2d 198; Yahudah v Metro N. Riverview House, 129 AD2d 429.) III. There are issues of fact as to whether defendant was negligent in failing to comply with New York City Administrative Code § 27-651. (Pappalardo v New York Health & Racquet Club, 279 AD2d 134; Patrolmen’s Benevolent Assn. of City of N.Y. v City of New York, 41 NY2d 205; Buchbinder, Tyunick & Co. v Tax Appeals Trib. of City of N.Y., 100 NY2d 389; Matter of New York Yankees Partnership v O’Cleireacain, 83 NY2d 550; Matter of De Peyster, 210 NY 216; American Tr. Ins. Co. v Sartor, 3 NY3d 71; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; People v Hedgeman, 70 NY2d 533; Price v Price, 69 NY2d 8; People v Ryan, 274 NY 149.)

      Hoey, King, Toker & Epstein, New York City (H. Leonard Toker, Harold Kenneth King, Jr., and Danielle M. Regan of counsel), for respondent.
    I. The Appellate Division correctly held that New York City Administrative Code § 27-651, “Panels subject to human impact loads,” which pertains to glass “in prime and storm doors, interior doors, fixed glass panels that may be mistaken for means of egress or ingress,” did not apply to a 13th floor exterior window and that the lower court improperly allowed appellant’s expert’s conclusory opinion to usurp the court’s function as the sole determiner of law. (New York Yankees Partnership v O’Cleireacain, 83 NY2d 550; Rodri

      guez v New York City Hous. Auth., 209 AD2d 260; Ross v Manhattan Chelsea Assoc., 194 AD2d 332; Marquart v Yeshiva Machezikel Torah D’Chasidel Belz of N.Y., 53 AD2d 688; Amatulli v Delhi Constr. Corp., 77 NY2d 525; Diaz v New York Downtown Hosp., 99 NY2d 542; Daubert v Merrell Dow Pharms., Inc., 509 US 579; Pappalardo v New York Health & Racquet Club, 279 AD2d 134.) II. The Appellate Division properly granted respondent’s motion for summary judgment where appellant has offered no competent evidence that the 13th floor exterior window through which appellant’s decedent was thrown was defective or a departure from good and accepted engineering and building safety practices. (Pappalardo v New York Health & Racquet Club, 279 AD2d 134; Pena v Schur, 245 AD2d 206; Bradley v Smithtown Cent. School Dist., 265 AD2d 283; Diaz v New York Downtown Hosp., 99 NY2d 542; Amatulli v Delhi Constr. Corp., 77 NY2d 525.)
   OPINION OF THE COURT

Read, J.

The events precipitating this lawsuit took place on St. Patrick’s Day, 1999. After lunching and watching the St. Patrick’s Day Parade, decedent Douglas Buchholz and three coworkers returned to their employer’s offices on the thirteenth floor of the full-block, 50-story General Motors tower at 767 Fifth Avenue in Manhattan. Decedent, who weighed over 200 pounds, and one of his three coworkers eventually got caught up in “play fighting.” Shortly after 7:00 p.m., decedent was “pushed” and “fell through” the center panel of a three-panel bay window. He plunged to his death, landing on the roof of the building’s three-story high showroom.

The bay window’s center panel measured 37 inches wide by roughly 88 inches high, was fitted with quarter-inch-thick non-tempered bronze plate glass, and was flanked by two 12-inch-wide by 88-inch-high side panels. The base of the bay window rested atop a 24-inch-deep convector cover, which was approximately 16 inches tall.

The General Motors tower was erected in 1968 for its namesake automotive company; defendant Trump 767 Fifth Avenue, LLC acquired the building in 1998. The building’s general manager since 1979 testified that he had no knowledge of “any problem with the [tower’s] window glass,” or of “any incidents . . . where glass popped out of windows or . . . slipped out of windows.” Prior to March 1999 there had been “occasional damage to glass” causing it to crack, but this was a “very, very low level of concern.” The building manager was not aware of “anybody breaking a glass from falling up against it” prior to March 1999, or of any other incident in his “many years in the building where glass . . . shattered” upon human impact.

When the building manager arrived at the scene of decedent’s fatal accident at about 8:30 p.m., he saw shards of glass in the center window panel’s frame; the side panels were undamaged. A sheetrock wall adjacent to the window was marred by “indentations” or “creases . . . where it was caved in.” Because the frame of the center window panel was intact and undamaged, it was not removed or repaired when the glass was later replaced.

Plaintiff Deborah Buchholz, decedent’s wife, commenced this action against defendant both individually and as executrix of decedent’s estate. Plaintiff alleges that defendant was negligent in its ownership and control of the premises, leading to decedent’s death. More specifically, plaintiffs bills of particulars claim that defendant neglected to furnish shatterproof glass windows and a safety rail across the window’s face, and failed to comply with applicable regulations, including New York City Administrative Code § 27-651.

Following joinder of issue and discovery, defendant moved for summary judgment to dismiss the complaint, arguing that there was no evidence that defendant was negligent and that section 27-651 did not apply to the window. In opposition, plaintiff submitted the affidavit of her expert, a registered architect and licensed professional engineer, who inspected the scene of the accident on April 18, 2002.

Plaintiffs expert averred that the window’s “very low sill” made it “highly susceptible to accidental human contact.” He opined that the window was a “similar installation[ ]” under section 27-651 of the New York City Administrative Code “because the glass panel was highly susceptible to human impact loads as are the other installations in [this] code provision,” which requires outfitting those glass panels subject to it with a pushhar or grille. Accordingly,

“good and accepted engineering and building safety practices dictated that a protective barrier bar be installed between 34 to 38 inches above the floor capable of withstanding a horizontal load of 50 pounds per linear foot without contracting [sic] the glass and that the barrier be a minimum of I-V2 inches thick.”

Plaintiff s expert opined that the failure to install this protective harrier violated section 27-651; departed from good and accepted engineering and building safety practices at the time the tower was built; was readily discoverable when defendant purchased the building and inspected the windows in 1998; and should have been remedied before decedent’s accident.

Plaintiffs expert continued that the tower’s “non-tempered glass was [also] hazardous because [this glass] is not resistant to horizontal human impact loads and is highly susceptible to shattering and breaking into sharp dangerous shards,” and that defendant should have recognized this danger. Further, “good engineering and building safety practices dictated that all the windows with non-tempered glass should have been safeguarded with a protective bar.” Plaintiff’s expert concluded that decedent’s death was “directly due to non-compliance with N.Y.C Building Code Section 27-651 and accepted engineering and building code practice.” Specifically, “[i]f the glass was properly tempered and/or a protective bar introduced across the window, . . . this accident which resulted in decedent’s death would have been avoided.”

Supreme Court denied defendant’s motion for summary judgment, stating that “[although . . . the window could not have been confused as a door or some other means of egress,” she was “unable to determine, as a matter of law, whether the placement of the window sill created a situation where a person could easily stumble, and fall through the glass pane, necessitating the protections required by section 27-651 of the Administrative Code.” Moreover, plaintiffs expert had “raised an issue of fact as to whether the construction/installation of the window was a serious deviation and departure from the standard and proper practice for office buildings in the City of New York.”

The Appellate Division reversed, granted defendant’s motion and dismissed the complaint. The Court concluded that as a matter of law section 27-651 does not apply to “exterior windows, whatever their location or dimensions” (4 AD3d 178, 178 [1st Dept 2004]). Further, the Court found that plaintiffs expert’s testimony was conclusory and unsupported, and “since the question of the applicability of [section 27-651] is a purely legal one, the motion court should not have allowed the expert to usurp its function as the sole determiner of law” (4 AD3d at 179 [citations omitted]). We granted plaintiff leave to appeal, and now affirm.

New York City Administrative Code § 27-643 (“Scope”) sets forth the scope of subchapter 10, article 12 (“Glass Panels”) of the Building Code as follows:

“The provisions of sections 27-644 through 27-648 of this article [12] shall apply to the use of glass in the exterior wall of a building and shall be limited to exterior application wherein the glass would not be subjected to any loads normal to the face of glass other than those due to wind. For applications involving human impact, the provisions of section 27-651 of this article shall apply. For other cases, the strength and mode of installation of glass shall conform to accepted industry standards.”

Thus, exterior windows normally subject only to wind loads are covered by sections 27-644 through 27-648, while glass applications involving human impact are governed by section 27-651.

Section 27-651 (“Panels subject to human impact loads”), in turn, provides that,

“[g]lass in prime and storm doors, interior doors, fixed glass panels that may be mistaken for means of egress or ingress, shower doors and tub enclosures, or in similar installations wherein one or more of the following criteria apply, shall meet the requirements set forth in table 10-9, or by comparative tests shall be proven to produce equivalent performance:
“(a) openings are located in regularly occupied spaces.
“(b) lowest point of panel is less than eighteen inches above finished floor.
“(c) minimum dimension of panel is larger than eighteen inches.”

The portion of table 10-9 applicable to a glass panel of the type and dimension of the bay window’s center panel (regular plate, over six square feet) specifies glass “[n]ot less than 3/16 in. thick” (as was the case here) and “protected by a push-bar or protective grille firmly attached on each exposed side, if not divided by a muntin” (as was not the case here). Thus, this appeal essentially reduces to whether the center window panel is a “similar installation! ]” within the meaning of section 27-651 and thus subject to the specifications in table 10-9.

Plaintiff contends that the bay window’s center panel is a “similar installation! ]” because its size, configuration and location in regularly occupied space rendered it highly susceptible to accidental human contact. By its plain, very specific language, however, section 27-651 addresses only doors and door-like panels (“Glass in prime and storm doors, interior doors, fixed glass panels that may be mistaken for means of egress or ingress, shower doors and tub enclosures” [emphasis added]), which are pushed or pulled or are otherwise subject to human contact when someone tries to enter or exit through them. We therefore conclude that the term “similar installations” in section 27-651 encompasses only doors and door-like panels—not a fixed exterior window panel.

Based on her expert’s opinion that the window was unsafe, plaintiff also argues that the Appellate Division erred in rejecting her common-law negligence claim. Plaintiffs expert opined that good and accepted engineering and building safety practices dictated installation of tempered glass in the window or, alternatively, a lV2-inch-thick protective barrier bar placed between 34 to 38 inches above the floor and capable of withstanding a horizontal load of 50 pounds per linear foot without contacting the glass. Further, plaintiff’s expert opined that decedent’s accidental death would have been averted “[i]f the glass was properly tempered and/or a protective bar introduced across the window.”

This conclusory testimony was insufficient to raise a question of fact as to whether defendant breached its duty to “maintain[ ] [its] property in a reasonably safe condition in view of all the circumstances, including the likelihood of injury to others, the seriousness of the injury, and the burden of avoiding the risk” (Basso v Miller, 40 NY2d 233, 241 [1976] [citation and internal quotation marks omitted]). Plaintiffs expert cited no authority, treatise, standard, building code, article or other corroborating evidence to support his assertion that good and accepted engineering and building safety practices called for the installation of tempered glass in the General Motors building when it was erected in 1968, or for defendant to retrofit this 50-story tower’s nontempered glass windows with bars after acquiring the building in 1998.

Plaintiffs expert cited only section 27-651 of the New York City Administrative Code—which we have held to be inapplicable as a matter of law—to support his opinion that protective barrier bars should have been installed across the face of the building’s nontempered glass windows either in 1968 or after 1998. He provided no authority for his very particular specifications (i.e., thickness, height above the floor, horizontal load capacity) for such bars, or any basis for his view that tempered glass and/or a bar would have prevented decedent’s accident, especially in light of the absence of any information about the height at which or the force with which decedent struck the bay window’s center panel. “Where the expert’s ultimate assertions are speculative or unsupported by any evidentiary foundation . . . the opinion should be given no probative force and is insufficient to withstand summary judgment” (Diaz v New York Downtown Hosp., 99 NY2d 542, 544 [2002]).

Here, the police reports indicate that decedent was pushed against and through the window as a consequence of rough “play fighting,” and the Medical Examiner’s report classifies the death as a homicide. Moreover, in the tower’s roughly 31 years of occupancy prior to March 17, 1999, there were no remotely similar occurrences such as glass popping or slipping out of a window, or a window panel breaking when someone came into contact with it. In light of these circumstances, decedent’s accident was not foreseeable as a matter of law (see Tagle v Jakob, 97 NY2d 165, 168 [2001]; Palsgraf v Long Is. R.R. Co., 248 NY 339, 344 [1928] [“(t)he risk reasonably to he perceived defines the duty to be obeyed”]). Concomitantly, the third-party act of pushing decedent into the window was sufficiently extraordinary to supersede any alleged negligence on defendant’s part (see Kush v City of Buffalo, 59 NY2d 26, 33 [1983]; see also Pena v Schur, 245 AD2d 206, 207 [1st Dept 1997], lv denied 91 NY2d 811 [1998]; Hyman v Queens County Bancorp, Inc., 3 NY3d 743 [2004] [holding that lack of second safety rail in bank was only speculatively the cause of plaintiffs injury]).

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.

      . Decedent’s death was ruled a homicide by the Medical Examiner; no criminal charges were ever filed. There is no eyewitness account of the events immediately preceding decedent’s death; the three coworkers refused to testify in this action. What we know derives principally from two Unusual Occurrence Reports prepared by the detective from the New York City Police Department who interviewed witnesses and investigated, as well as a Complaint Report form. These documents, from which the quotations in the text are taken, were completed in the early morning hours of March 18, 1999. The Complaint Report indicates the presence of “bottles [and] glasses” at the scene of decedent’s fatal accident.

      . This latter measurement was furnished by plaintiffs expert. According to defendant, the convector cover upon which the bay window’s base rested was roughly 20 inches tall.


author: ClPARICK, J. Read, J.

text:
    [832 NE2d 26, 799 NYS2d 170]
    EBC I, Inc., Formerly Known as eToys, Inc., by the Official Committee of Unsecured Creditors of EBC I, Inc., Respondent, v Goldman, Sachs & Co., Appellant.
    Argued March 29, 2005;
    decided June 7, 2005

      POINTS OF COUNSEL

      Sullivan & Cromwell LLP, New York City 0John L. Warden, Penny Shane, David M.J. Rein, Jeremy C. Bates and Matthew D. Dunn of counsel), for appellant.
    I. The Appellate Division’s fiduciary duty, professional malpractice and fraud holdings lack any support in the law of New York or otherwise. (Horn v 440 E. 57th Co., 151 AD2d 112; Scalp & Blade v Advest, Inc., 281 AD2d 882; Northeast Gen. Corp. v Wellington Adv., 82 NY2d 158; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Polonetsky v Better Homes Depot, 97 NY2d 46; Caniglia v Chicago Tribune-N.Y. News Syndicate, 204 AD2d 233; CIBC Bank & Trust Co. [Cayman] v Credit Lyonnais, 270 AD2d 138; Schachter v Citibank, 193 AD2d 593; Meinhard v Salmon, 249 NY 458; SNS Bank v Citibank, 7 AD3d 352.) II. The decision below threatens Goldman, Sachs & Co.’s role as gatekeeper to capital markets and creates uncertainty for those who choose New York law to govern underwritings. (Chris-Craft Indus., Inc. v Piper Aircraft Corp., 480 F2d 341, 430 US 1; Intercontinental Planning v Daystrom, Inc., 24 NY2d 372; Ehrlich-Bober & Co. v University of Houston, 49 NY2d 574.) III. The creditors’ other claims are also flawed and the First Department has erred in reviving them. (Kirke La Shelle Co. v Armstrong Co., 263 NY 79; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; Dalton v Educational Testing Serv., 87 NY2d 384; Chrysler Credit Corp. v Dioguardi Jeep Eagle, 192 AD2d 1066; Maxon Intl. v International Harvester Co., 82 AD2d 1006; Paramount Film Distrib. Corp. v State of New York, 30 NY2d 415; Clark v Daby, 300 AD2d 732; Wiener v Lazard Freres & Co., 241 AD2d 114; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382; LaBarte v Seneca Resources Corp., 285 AD2d 974.)

      Pomerantz Haudek Block Grossman & Gross LLP, New York City (Stanley M. Grossman, Shaheen Rushd and Murielle J. Steven of counsel), Wachtel & Masyr LLP (William B. Wachtel of counsel) and Traub, Bonacquist & Fox LLP (Paul Traub, Michael S. Fox and Susan F Balaschak of counsel) for respondent.
    I. The First Department properly sustained plaintiffs claim for breach of fiduciary duty. (Xpedior Creditor Trust v Credit Suisse First Boston [USA] Inc., 341 F Supp 2d 258; MDCM Holdings, Inc. v Credit Suisse First Boston Corp., 216 F Supp 2d 251; Kern v Currie Assoc., 220 AD2d 255; Wiener v Lazard Freres & Co., 241 AD2d 114; Conte v U.S. Alliance Fed. Credit Union, 303 F Supp 2d 220; LaBarte v Seneca Resources Corp., 285 AD2d 974; FLS Group v Goldinger, 6 Misc 3d 1003[A]; Frydman & Co. v Credit Suisse First Boston Corp., 272 AD2d 236; JHH Pictures v Rawkus Entertainment, 291 AD2d 356; Societe Nationale D’Exploitation Industrielle Des Tabacs Et Allumettes v Salomon Bros. Intl., 251 AD2d 137.) II. The First Department properly reinstated plaintiffs claim for professional malpractice. (Chase Scientific Research v NIA Group, 96 NY2d 20; Bestolife Corp. v American Amicable Life, 5 AD3d 211; In re Initial Pub. Offering Antitrust Litig., 287 F Supp 2d 497; Dymm v Cahill, 730 F Supp 1245; Castle Oil Corp. v Thompson Pension Empl. Plans, 299 AD2d 513; Exeter Bancorporation, Inc. v Kemper Sec. Group, Inc., 58 F3d 1306; Smith v Arthur Andersen L.L.P., 175 F Supp 2d 1180; In re Daisy Sys. Corp., 97 F3d 1171; Cristallina S.A. v Christie, Manson & Woods Intl., 117 AD2d 284; Channel Master Corp. v Aluminium Ltd. Sales, 4 NY2d 403.) III. The First Department correctly reinstated the fraud claim predicated on Goldman, Sachs & Co.’s receipt of undisclosed illicit compensation. (Jered Contr. Corp. v New York City Tr. Auth., 22 NY2d 187; Lanzi v Brooks, 43 NY2d 778; Virginia Bankshares, Inc. v Sandberg, 501 US 1083; Eisenberg v Gagnon, 766 F2d 770; Oxford Health Plans [NY] v BetterCare Health Care Pain Mgt. & Rehab, 305 AD2d 223; Foley v D’Agostino, 21, AD2d 60; Bernstein v Kelso & Co., 231 AD2d 314; Auguston v Spry, 282 AD2d 489; Federal Ins. Co. v Specialty Paper Box Co., 222 AD2d 254; Banner Indus. v Schwartz, 181 AD2d 479.) IV The First Department properly revived plaintiff’s claim of unjust enrichment. (Clark v Daby, 300 AD2d 732, 100 NY2d 503; Todd v Pearl Woods, 20 AD2d 911, 15 NY2d 817; Marks v CDW Computer Ctrs., Inc., 122 F3d 363; McGrath v Hilding, 41 NY2d 625; Simonds v Simonds, 45 NY2d 233; Carriafielio-Diehl & Assoc., Inc. v D&M Elec. Contr., Inc., 12 AD3d 478; Smith v Chase Manhattan Bank, USA, 293 AD2d 598; Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382; Farash v Sykes Datatron

      ics, 59 NY2d 500; Schuler-Haas Elec. Corp. v Wager Constr. Corp., 57 AD2d 707.) V. The First Department correctly reinstated the claim for breach of the implied covenant of good faith and fair dealing. (Kirke La Shelle Co. v Armstrong Co., 263 NY 79; 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144; MDCM Holdings, Inc. v Credit Suisse First Boston Corp., 216 F Supp 2d 251; Zurakov v Register.Com, Inc., 304 AD2d 176; Havel v Kelsey-Hayes Co., 83 AD2d 380; LaBarte v Seneca Resources Corp., 285 AD2d 974; Richbell Info. Servs. v Jupiter Partners, 309 AD2d 288; Paz v Singer Co., 151 AD2d 234.) VI. The First Department erred in dismissing plaintiffs claim for breach of the express terms of the underwriting agreement. (Chrysler Credit Corp. v Dioguardi Jeep Eagle, 192 AD2d 1066; Maxon Intl. v International Harvester Co., 82 AD2d 1006, 56 NY2d 879; William C. Atwater & Co. v Panama R.R. Co., 246 NY 519.) VII. The First Department properly upheld plaintiffs claim for bankruptcy-related damages. (Kenford Co. v County of Erie, 67 NY2d 257; Associated Textile Rental Servs. v Xerox Corp., 2 AD3d 1301; Gibbs v Breed, Abbott & Morgan, 271 AD2d 180; Derdiarian v Felix Contr. Corp., 51 NY2d 308; Steitz v Gifford, 280 NY 15; American Fed. Group, Ltd. v Rothenberg, 136 F3d 897; Balemian v LB Real Estate Dev. Corp., 226 AD2d 223; Ashland Mgt. v Janien, 82 NY2d 395; Lamborn v Dittmer, 873 F2d 522; Emergent Capital Inv. Mgt., LLC v Stonepath Group, Inc., 343 F3d 189.)

      Cleary, Gottlieb, Steen & Hamilton, New York City (Mitchell A. Lowenthal, Lewis J. Liman, David H. Herrington, Nancy I. Ruskin, Stuart N. Mast and Amy Chung of counsel), for Securities Industry Association, amicus curiae.
    I. Imposing an extra-contractual fiduciary duty dramatically rewrites the actual agreement struck by the parties in the underwriting agreement. (Abide Contr. v New York City School Constr. Auth., 91 NY2d 1; Northeast Gen. Corp. v Wellington Adv., 82 NY2d 158; Quantum Chem. Corp. v Reliance Group, 180 AD2d 548; Savage Records Group v Jones, 247 AD2d 274; National Union Fire Ins. Co. of Pittsburgh, Pa. v Red Apple Group, 281 AD2d 296; Carnegie v H&R Block, 269 AD2d 145; Prestige Foods v Whale Sec. Co., 243 AD2d 281; V. Ponte & Sons v American Fibers Intl., 222 AD2d 271; Oursler v Women’s Interart Ctr., 170 AD2d 407; Blue Grass Partners v Bruns, Nordeman, Rea & Co., 75 AD2d 791.) II. Imposing a fiduciary duty is contrary to the business realities of the underwriter-issuer relationship. (In re Wicat Sec. Litig., 600 F Supp 1236; Birnbaum v Birnbaum, 73 NY2d 461; Drucker v Mige Assoc. II, 225 AD2d 427; Hasbrouck v

      Rymkevitch, 25 AD2d 187.) III. Imposing a fiduciary duty on underwriters is at odds with the regulatory framework of the federal securities laws. (Chris-Craft Indus., Inc. v Piper Aircraft Corp., 480 F2d 341, 430 US 1; Escott v BarChris Constr. Corp., 283 F Supp 643; Feit v Leasco Data Processing Equip. Corp., 332 F Supp 544.) IV The breach of fiduciary duty claim should have been dismissed as a matter of law. (National Union Fire Ins. Co. of Pittsburgh, Pa. v Red Apple Group, 281 AD2d 296; Carnegie v H&R Block, 269 AD2d 145; Savage Records Group v Jones, 247 AD2d 274.)
   OPINION OF THE COURT

ClPARICK, J.

Plaintiff, the Official Committee of Unsecured Creditors of EBC I, Inc., formerly known as eToys, Inc., brought this action against defendant Goldman, Sachs & Co., the lead managing underwriter of its initial public stock offering, alleging five causes of action related to the underwriting agreement: breach of fiduciary duty, breach of contract, fraud, professional malpractice and unjust enrichment. We hold that plaintiff’s complaint fails to state claims for breach of contract, professional malpractice and unjust enrichment. We therefore modify the Appellate Division order to dismiss these claims and, as modified, affirm to allow the fiduciary duty cause of action to proceed. Leave to replead the fraud cause of action was correctly granted; plaintiff has filed an amended complaint, but the sufficiency of that pleading is not before us on this appeal.

I.

This case involves the underwriting process by which investment banks help take securities to the market in an initial public offering (IPO). Companies may decide to make such an offering for several reasons, including a desire to raise new capital and to create a public market for their shares (see 1 Thomas Lee Hazen, Securities Regulation § 3.1 [2] [5th ed]; see also Larry D. Soderquist, Understanding the Securities Law § 2:2 et seq. [Practising Law Institute 4th ed]). A “firm commitment underwriting,” at issue here, typically involves an agreement whereby the “issuer”—or company seeking to issue the security (see Securities Act of 1933 [48 US Stat 74, as amended] § 2 [codified at 15 USC § 77b (a) (4)])—sells an entire allotment of shares to an investment firm who purchases the shares with a view to sell them to the public (see Securities Act of 1933 § 2 [15 USC § 77b (a) (11)] [defining an “underwriter”]; see also 1 Ha-zen, Securities Regulation § 2.1 [2] [B]; Louis Loss and Joel Seligman, Fundamentals of Securities Regulation ch 2A [3d ed]).

As underwriter, the functions of the investment firm include negotiating an initial public offering price for the securities with the issuer, purchasing the securities from the issuer at a discount and reselling them on the market at the public offering price. The difference or “spread” between the amount the underwriter pays for the securities and the price at which the securities are sold to the public makes up the underwriter’s compensation for its services. Because in a firm commitment underwriting the underwriter owns, and is obligated to pay the issuer for the securities regardless of whether it can resell them, it may assemble a group of underwriters, known as a syndicate, to help absorb the risk.

As stated in plaintiffs complaint, in the late 1990’s, eToys, Inc., an Internet retailer specializing in the sale of products for children, sought to go public in order to obtain financing necessary to further implement its business plan. In January 1999, eToys retained Goldman Sachs as lead managing underwriter of its initial public offering.

Within the context of its engagement, Goldman Sachs met with potential investors, responded to inquiries about eToys’ business and gauged investors’ indications of interest in eToys’ shares. On April 19, 1999, eToys and Goldman Sachs finalized the underwriting agreement. eToys agreed to sell 8,320,000 shares of its stock to Goldman Sachs and the other underwriters for $18.65 per share with the option to buy an additional 1,248,000 shares at the same price to cover overallotments. The agreement also provided that Goldman Sachs would offer the shares for public sale upon the terms and conditions set forth in the prospectus, which fixed the initial offering price at $20 per share. Thus, Goldman Sachs’ potential profit was $1.35 per share or 6.75% of the offering proceeds. Goldman Sachs was to receive a total of at most $12,916,800 from the sale.

On May 20, 1999, the first day of trading, the stock opened at $79 per share, rose as high as $85 per share and closed at $76.56. By the end of the year, however, the stock closed at $25. Soon thereafter, it fell below $20 and never rose above the initial offering price. Eventually, in March 2001, eToys filed a voluntary petition for reorganization under chapter 11 of the United States Bankruptcy Code in the District of Delaware. The Bankruptcy Court appointed the Official Committee of Unsecured Creditors and authorized the committee to bring this action on behalf of eToys, now known as EBC I, Inc.

The complaint alleges that eToys relied on Goldman Sachs for its expertise as to pricing the IPO, and that Goldman Sachs gave advice to eToys without disclosing that it had a conflict of interest. Specifically, the complaint alleges that Goldman Sachs entered into arrangements “whereby its customers were obligated to kick back to Goldman a portion of any profits that they made” from the sale of eToys securities subsequent to the initial public offering. Because a lower IPO price would result in a higher profit to these clients upon the resale of the securities and thus a higher payment to Goldman Sachs for the allotment, plaintiff alleges Goldman Sachs had an incentive to advise eToys to underprice its stock. As a result of this undisclosed scheme, Goldman Sachs was allegedly paid 20% to 40% of the clients’ profits from trading the eToys securities.

Relying on these allegations, plaintiff brought five causes of action against Goldman Sachs: breach of fiduciary duty (first), breach of contract (second), fraud (third), professional malpractice (fourth) and unjust enrichment (fifth). In response, Goldman Sachs moved to dismiss the complaint in its entirety for failure to state any cause of action.

Supreme Court in two orders (one denominated judgment) granted the motion to the extent of dismissing the second, third (with leave to replead), fourth and fifth causes of action. The court denied that part of the motion seeking to dismiss the first cause of action for breach of fiduciary duty, finding that “[a]l-though the contract did not establish a formal fiduciary relationship . . . the pleading sufficiently raises an issue as [to] the existence of an informal one,” and noting that Goldman Sachs had also advised eToys in connection with a preferred stock offering.

The Appellate Division modified the initial order of Supreme Court, opining that the breach of fiduciary duty claim was correctly sustained upon allegations showing a preexisting relationship between eToys, Inc. and Goldman Sachs that justified eToys’ alleged trust in pricing the shares. The Court further held that the trial court properly dismissed the fraud cause of action with leave to replead, reasoning that plaintiff did not allege with sufficient particularity who made the purported misrepresentations to eToys, Inc. The Appellate Division, however, disagreed with the Supreme Court as to the breach of contract, professional malpractice and unjust enrichment causes of action, reinstating all three.

Goldman Sachs appeals by leave of the Appellate Division on a certified question. We now modify the order of the Appellate Division by dismissing the second, fourth and fifth causes of action. We agree with the trial court and Appellate Division that the pleading of the fiduciary duty claim is sufficient and that leave to replead the fraud claim was proper.

II.

In the context of a motion to dismiss pursuant to CPLR 3211, the court must afford the pleadings a liberal construction, take the allegations of the complaint as true and provide plaintiff the benefit of every possible inference (see Goshen v Mutual Life Ins. Co. of N.Y., 98 NY2d 314, 326 [2002]). Whether a plaintiff can ultimately establish its allegations is not part of the calculus in determining a motion to dismiss. Applying this standard, we conclude that plaintiffs allegations of breach of fiduciary duty survive Goldman Sachs’ motion to dismiss.

A fiduciary relationship “exists between two persons when one of them is under a duty to act for or to give advice for the benefit of another upon matters within the scope of the relation” (Restatement [Second] of Torts § 874, Comment a). Such a relationship, necessarily fact-specific, is grounded in a higher level of trust than normally present in the marketplace between those involved in arm’s length business transactions (see Northeast Gen. Corp. v Wellington Adv., 82 NY2d 158, 162 [1993]). Generally, where parties have entered into a contract, courts look to that agreement “to discover . . . the nexus of [the parties’] relationship and the particular contractual expression establishing the parties’ interdependency” (see id. at 160). “If the parties ... do not create their own relationship of higher trust, courts should not ordinarily transport them to the higher realm of relationship and fashion the stricter duty for them” (id. at 162). However, it is fundamental that fiduciary “liability is not dependent solely upon an agreement or contractual relation between the fiduciary and the beneficiary but results from the relation” (Restatement [Second] of Torts § 874, Comment b).

Goldman Sachs argues that the relationship between an issuer and underwriter is an arm’s length commercial relation from which fiduciary duties may not arise. It may well be true that the underwriting contract, in which Goldman Sachs agreed to buy shares and resell them, did not in itself create any fiduciary duty. However, a cause of action for breach of fiduciary duty may survive, for pleading purposes, where the complaining party sets forth allegations that, apart from the terms of the contract, the underwriter and issuer created a relationship of higher trust than would arise from the underwriting agreement alone.

Here, the complaint alleges an advisory relationship that was independent of the underwriting agreement. Specifically, plaintiff alleges eToys was induced to and did repose confidence in Goldman Sachs’ knowledge and expertise to advise it as to a fair IPO price and engage in honest dealings with eToys’ best interest in mind. Essentially, according to the complaint, eToys hired Goldman Sachs to give it advice for the benefit of the company, and Goldman Sachs thereby had a fiduciary obligation to disclose any conflict of interest concerning the pricing of the IPO. Goldman Sachs breached this duty by allegedly concealing from eToys its divided loyalty arising from its profit-sharing arrangements with clients.

Contrary to Goldman Sachs’ contention, recognition of a fiduciary duty to this limited extent—requiring disclosure of Goldman Sachs’ compensation arrangements with its customers—is not in conflict with an underwriter’s general duty to investors under the Securities Act of 1933 to exercise due diligence in the preparation of a registration statement. An obligation not to conceal from the issuer private arrangements made with a group of potential investors does not compromise Goldman Sachs’ charge to be truthful in its public disclosure regarding the issuer’s business. For similar reasons, we do not share the dissent’s concern that upholding an issuer’s fiduciary duty claim against an underwriter “potentially conflicts with a highly complex regulatory framework designed to safeguard investors” (dissenting op at 23). Recognizing a common-law remedy, under these circumstances, will not hinder the efforts being expended to regulate in this area.

Goldman Sachs’ additional argument that there could be no fiduciary duty in this case because eToys and Goldman Sachs functioned as a typical seller and buyer is also unavailing. Generally, a buyer purchases a seller’s goods at a wholesale price and attempts to resell those goods at the highest possible profit. Such a transaction would negate any fiduciary duty concerning pricing advice as no rational seller would place trust in a buyer’s pricing given the parties’ opposing interests. Here, in contrast, Goldman Sachs and eToys allegedly agreed to a fixed profit from the selling of the securities—Goldman Sachs was to receive about 7% of the offering proceeds. Thus eToys allegedly believed its interests and those of Goldman Sachs were aligned: the higher the price, the higher Goldman Sachs’ 7% profit. Consequently, eToys allegedly had a further reason to trust that Goldman Sachs would act in eToys’ interest when advising eToys on the IPO price.

Goldman Sachs warns that to find a fiduciary relationship in this case may have a significant impact on the underwriting industry. We think its concern is overstated. To the extent that underwriters function, among other things, as expert advisors to their clients on market conditions, a fiduciary duty may exist. We stress, however, that the fiduciary duty we recognize is limited to the underwriter’s role as advisor. We do not suggest that underwriters are fiduciaries when they are engaged in activities other than rendering expert advice. When they do render such advice, the requirement to disclose to the issuers any material conflicts of interest that render the advice suspect should not burden them unduly.

Accepting the complaint’s allegations as true, as the Court must at this stage, plaintiff has sufficiently stated a claim for breach of fiduciary duty. This holding is not at odds with the general rule that fiduciary obligations do not exist between commercial parties operating at arm’s length—even sophisticated counseled parties—and we intend no damage to that principle. Under the complaint here, however, the parties are alleged to have created their own relationship of higher trust beyond that which arises from the underwriting agreement alone, which required Goldman Sachs to deal honestly with eToys and disclose its conflict of interest—the alleged profit-sharing arrangement with prospective investors in the IPO.

III.

Moving next to plaintiffs other causes of action, we hold that the courts below properly dismissed the claim for breach of contract in the absence of an allegation that Goldman Sachs breached any provisions of the underwriting agreement. It is undisputed that Goldman Sachs fulfilled its commitments as set forth in the parties’ contract, purchasing all of the available shares at a total of $178.4 million paid to eToys and reselling them to the public at the initial offering price of $20 per share.

Relatedly, plaintiff has also failed to plead a cause of action for breach of an implied covenant of good faith and fair dealing sufficient to survive dismissal under CPLR 3211. The complaint does not adequately allege that Goldman Sachs injured eToys’ right to receive the benefits of their agreement (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144, 153 [2002]; see also Dalton v Educational Testing Serv., 87 NY2d 384, 389-390 [1995]). As stated in the Prospectus, the principal purposes of the public offering were to increase working capital, to create a public market for the common stock, to facilitate future access to public markets, and to increase eToys’ visibility in the retail marketplace. There is no dispute that the contractual objectives were achieved as a result of Goldman Sachs’ underwriting services, and the complaint fails to allege otherwise.

Because this case arises from defendant’s appeal, the issue with respect to plaintiffs fraud claim is limited to whether the courts below abused their discretion in granting plaintiff leave to replead. We find no abuse of discretion as plaintiffs allegations, if accompanied by sufficient detail, would be adequate to support a fraud claim at this juncture (see Lama Holding Co. v Smith Barney, 88 NY2d 413, 421 [1996]; see also CPC Intl. v McKesson Corp., 70 NY2d 268, 285 [1987]).

Next is the cause of action for professional malpractice. The essence of plaintiffs allegations in this regard is that Goldman Sachs engaged in intentional misconduct by underpricing its shares, not that the investment firm acted negligently in failing to exercise a particular level of skill. Thus, we hold that the malpractice claim was properly dismissed as insufficiently pleaded and leave open the question whether a financial advisor or underwriter may ever be treated as a professional for purposes of such liability (see Chase Scientific Research v NIA Group, 96 NY2d 20, 29-30 [2001]).

Lastly, plaintiff fails to state a cause of action for unjust enrichment as the existence of a valid contract governing the subject matter generally precludes recovery in quasi contract for events arising out of the same subject matter (see Clark-Fitzpatrick, Inc. v Long Is. R.R. Co., 70 NY2d 382, 388 [1987]).

Accordingly, the order of the Appellate Division should be modified, without costs, by dismissing the second, fourth and fifth causes of action and as so modified, affirmed. The certified question should be answered in the negative.

Read, J.

(dissenting in part). The majority today holds that the lead managing underwriter in a firm commitment underwriting owes a fiduciary duty to the issuer to disclose conflicts of interest in connection with the pricing of securities. This new fiduciary obligation wars against our precedent and potentially conflicts with a highly complex regulatory framework designed to safeguard investors. I therefore respectfully dissent.

“Unless statutory language or public policy dictates otherwise, the terms of a written agreement define the rights and obligations of the parties” (Abiele Contr. v New York City School Constr. Auth., 91 NY2d 1, 9 [1997]). We have faithfully—that is, until today—declined to second-guess or interpolate unbargained-for provisions into contracts that are “the product of an arms-length transaction between sophisticated businessmen, ably represented” (JMD Holding Corp. v Congress Fin. Corp., 4 NY3d 373, 382 [2005]; see also South Rd. Assoc., LLC v International Bus. Machs. Corp., 4 NY3d 272, 277 [2005] [the “instrument was negotiated between sophisticated, counseled business people negotiating at arm’s length” (quoting Matter of Wallace v 600 Partners Co., 86 NY2d 543, 548 [1995] and Vermont Teddy Bear Co. v 538 Madison Realty Co., 1 NY3d 470, 475 [2004])]; Fiore v Oakwood Plaza Shopping Ctr., 78 NY2d 572, 581 [1991] [“Defendants were sophisticated parties involved in an arm’s length commercial transaction .... The purchase price of the land alone was well in excess of $1 million, indicating the magnitude of the project. Furthermore, the parties were represented by counsel in negotiating the terms of the agreement”]; Chimart Assoc. v Paul, 66 NY2d 570, 574 [1986] [“the contract at issue is part of a multimillion dollar transaction involving sophisticated, counseled parties dealing at arm’s length”]).

More particularly, we have—again, until today—refrained from injecting fiduciary obligations into sophisticated, counseled parties’ arm’s length commercial dealings. In refusing to fashion a “newly-notched fiduciary-like duty” for finders in Northeast Gen. Corp. v Wellington Adv. (82 NY2d 158, 161 [1993]), we remarked that “[i]f the parties find themselves or place themselves in the milieu of the ‘workaday’ mundane marketplace, and if they do not create their own relationship of higher trust, courts should not ordinarily transport them to the higher realm of relationship and fashion the stricter duty for them.” (Id. at 162.)

Plaintiff, the committee of unsecured creditors of the bankrupt eToys, Inc., claims that Goldman, Sachs & Co., the lead managing underwriter of eToys’ initial public offering (IPO), duped eToys into underpricing its stock at $20 a share. Goldman allegedly carried out this deception so that it might profit from secret side deals with preferred customers who “were obligated to kick back to Goldman a portion of any profits that they made on after[ ]market sales of eToys [’] securities allocated to them at the IPO.” While the pleading does not spell out exactly how underpricing worked in Goldman’s favor, plaintiffs theory has to be that Goldman, whose underwriting compensation was a percentage (6.75%) of aggregate offering proceeds, stood to make more money on kickbacks from these secret side deals than it would have earned on its increased compensation from selling shares at some higher, theoretically “correct” price. Plaintiff further alleges that “[b]ased on communications with Goldman, it was eToys’ understanding that the offering price for eToys’ common shares was to be set primarily by reference to then current market conditions and the anticipated demand for eToys’ shares.”

In allowing plaintiffs claim for breach of fiduciary duty to go forward, the majority disregards that eToys was a sophisticated, well-counseled business entity. eToys’ major stockholders included important venture-capital and corporate investors; its largest single stockholder, Idealab, styles itself as an incubator for successful technology companies (see chttp:// www.idealab.com>, cached at <http://www.courts.state.ny.us/ reporter/webdocs/idealab.htm>). eToys was represented by the Venture Law Group, EC., which “specializes in representing high potential technology companies from before their creation through their public offering or acquisition and beyond,” and which in 1999 handled “the fourth largest number of initial public offerings for technology companies in the country” (<http://www.venlaw.com/About>, cached at <http:// www.courts.state.ny.us/reporter/webdocs/ Venture_Law_Group.htm>).

Further, the offering price was a key term in the underwriting agreement, a purchase contract between eToys, the issuer/ seller, and Goldman, the underwriter/buyer, who represented all the underwriters in the syndicate. How may a buyer ever owe a duty of the highest trust and confidence to a seller regarding a negotiated purchase price? The interests of a buyer and seller are inevitably not the same. Indeed, it is a longstanding principle of contract law that a buyer may make a binding contract to buy something that it knows its seller undervalues (Laidlaw v Organ, 2 Wheat [15 US] 178 [1817]).

Here, eToys’ prospectus acknowledged that the “initial public offering price for the common stock has been negotiated among eToys and the representatives of the underwriters” (emphasis added). Contrary to plaintiffs allegation, eToys also represented in the prospectus that the offering price was not driven by anticipated demand alone. The other factors that came into play were “eToys’ historical performance, estimates of eToys’ business potential and earnings prospects, an assessment of eToys’ management and the consideration of the above factors in relation to market valuation of companies in related businesses.” Further, eToys’ prospectus identified four “principal purposes” for the IPO: to increase working capital, create a public market for its stock, facilitate future access to the public capital markets, and increase visibility in the retail marketplace. By selling only 8.2% of its outstanding common stock at $20 a share, eToys raised the capital called for by its business plan.

In short, the offering price was not “set” by Goldman, it was negotiated by sophisticated, represented parties—the issuer/ seller and the underwriter/buyer; the offering price was negotiated with reference to more than “then current market conditions” and “anticipated demand”; and eToys did not seek to negotiate an offering price solely to maximize the proceeds raised in the offering. Documentary evidence in the record confirms all these points, and the nature of the contractual relationship between an issuer and an underwriter is long-established and well-understood (see United States v Morgan, 118 F Supp 621, 635-655 [SD NY 1953]). While plaintiffs may have alleged “an advisory relationship that was independent of the underwriting agreement” (majority op at 20), conclusory allegations are insufficient to survive a motion to dismiss (see e.g. Caniglia v Chicago Tribune-N.Y. News Syndicate, 204 AD2d 233, 233-234 [1st Dept 1994] [on motion to dismiss, facts pleaded are presumed to be true and accorded every favorable inference, but “allegations consisting of bare legal conclusions, as well as factual claims inherently incredible or flatly contradicted by documentary evidence are not entitled to such consideration”]).

Finally, I am less sanguine than the majority about the consequences of recognizing “a fiduciary duty . . . requiring disclosure of [a lead underwriter’s] compensation arrangements with its customers” (majority op at 20). The excesses of the market in the days of the Internet high-tech mania did not go unnoticed by regulators. In addition to a flurry of enforcement actions at the state and federal levels, the Securities and Exchange Commission (SEC) in 2002 asked the two major self-regulatory organizations (SROs), the New York Stock Exchange, Inc. (NYSE) and the National Association of Securities Dealers, Inc. (NASD), to convene a high-level group of business and academic leaders to review the IPO process in light of the experience of the 1990’s, and to recommend ways to cure the problems exposed during that period and to improve the underwriting process going forward. This group produced a report in May 2003 (see NYSE/NASD IPO Advisory Committee, Report and Recommendations of a committee convened by the New York Stock Exchange, Inc. and NASD at the request of the US Securities and Exchange Commission [May 2003], published on the Internet at <http://www.nasd.com/web/groups/rules_regs/ documents/rules_regs/nasdw_010373.pdf>, cached at <http:// www.courts.state.ny.us/reporter/webdocs/nasdw_010373.pdf>), directly leading, among other things, to pending proposed NYSE rule 470 and NASD rule 2712 {see 69 Fed Reg 77,804 [Dec. 28, 2004]; see also 70 Fed Reg 19,672 [Apr. 13, 2005]). These rather complicated proposed rules govern allocations and distributions of shares in IPOs. How our new fiduciary duty for underwriters may fit into or conflict with the developing regulatory scheme is impossible to predict. We have, however, at the very least introduced uncertainty into a complex subject of enormous importance to investors. This subject is, in my view, better dealt with by specialized regulators than by the evolving common law.

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

Order modified, etc.

      . See William J. Grant, Jr., Overview of the Underwriting Process, in Securities Underwriting: A Practitioner’s Guide, at 25-45 (Bialkin and Grant editors, 1985); John S. D’Alimonte, The Letter of Intent and the Basic Structure of An Offering, in Securities Underwriting, supra at 85-98; David B. Rea and William J. Grant, Jr., The Syndication and Marketing Process, in Securities Underwriting, supra at 277-291; Samuel N. Allen, A Lawyer’s Guide to the Operation of Underwriting Syndicates, 26 New Eng L Rev 319, 320-321 (1991).

      . Three other comanaging underwriters were BancBoston Robertson Stephens Inc., Donaldson, Lufkin & Jenrette Securities Corp., and Merrill Lynch, Pierce, Fenner & Smith, Inc., who formed the underwriting syndicate, later joined by additional firms. Plaintiff has filed a separate action against the other syndicate underwriters alleging substantially the same claims as here.

      . Plaintiff also claimed additional damages incurred by eToys as a result of Goldman Sachs’ misconduct causing the failure of the business and its eventual bankruptcy. The Appellate Division ruled that the “proximate cause of the damages claimed is an issue of fact inappropriate for determination at this juncture” (7 AD3d 418, 421 [2004]). We agree.

      . The underwriter’s responsibility with regard to a registration statement is to provide full and adequate information to investors concerning the distribution of the securities and the issuing company (see Securities Act of 1933 § 7 [15 USC § 77g] [providing in part that any registration statement shall contain information and documents “necessary or appropriate in the public interest or for the protection of investors”]; see also Securities Act of 1933 schedule A [15 USC § 77aa] [schedule of information required in registration statement]; § 11 [15 USC § 77k] [establishing civil liability on account of false registration statement]).

      . Other jurisdictions interpreting New York law have allowed similar pleadings to go forward and have held that the question of whether an underwriter had fiduciary obligations to the issuer of an IPO is a fact-specific determination to be made by the factfinder (see Breakaway Solutions, Inc. v Morgan Stanley & Co. Inc., 2004 WL 1949300, 2004 Del Ch LEXIS 125 [Del Ct Ch, Aug. 27, 2004]; Xpedior Creditor Trust v Credit Suisse First Boston [USA] Inc., 341 F Supp 2d 258 [US Dist Ct, SD NY 2004]; MDCM Holdings, Inc. v Credit Suisse First Boston Corp., 216 F Supp 2d 251 [US Dist Ct, SD NY 2002]).

      . An IPO is the first public issuance of a stock from a company that has not previously been traded publicly. In a “hot” IPO, like eToys’, the stock immediately trades at a premium in the aftermarket, the trading that takes place after termination of the price and trading restrictions governing the offering.

      . “Underpricing” refers to the difference between the price at which stock is sold to the public in an IPO and the price in the aftermarket. That IPOs are underpriced is “as shocking a surprise as Claude Rains’ discovery in ‘Casablanca’ that gambling was in progress at Rick’s Café,” since the “systematic underpricing of IPO shares is probably the most thoroughly documented empirical fact about IPOs” (Coffee, Corporate Securities, The IPO Allocation Probe: Who Is the Victim?, NYLJ, Jan. 18, 2001, at 5, col 1; see generally Ritter, The Long-Run Performance of Initial Public Offerings, 46 J Fin 3 [1991] [citing studies showing that IPOs produce 16.4% average positive initial return as measured from the offering price to the market price at the end of the first day of trading, and that extent of underpricing is highly cyclical, with much higher positive initial returns evident during “hot issue” markets; and, using a sample of 1,526 IPOs that went public in the United States in the 1975-1984 period, documenting third “anomaly,” which is that in the long run IPOs appear to be overpriced]; see also Griffith, Spinning and Underpricing: Legal and Economic Analysis of the Preferential Allocation of Shares in Initial Public Offerings, 69 Brook L Rev 583, 590-630 [Winter 2004] [examining various theories to explain underpricing]). During the heyday of the Internet stock bubble, when eToys’ public offering took place, very large “pops” in first-day IPO prices were commonplace, reaching a zenith (or nadir, depending upon your point of view) with the IPO of VA Linux Systems in December 1999. VA Linux—which, like eToys is now bankrupt—was priced at $30 a share, opened at $300 a share and closed at $242.375 a share, thus soaring 698% in opening day Nasdaq trading (see Fisher, A Tiny Company Without Profits Goes Public With a Bang, New York Times, Dec. 10, 1999; see also Baker, Who Wants to Be a Millionaire? Law Firms Investing in Hot High-Tech IPOs Are Making a Fortune, But Some Critics Worry the Stock Craze is Clouding Ethics Matters, 86 Feb ABA J 36 [“The fact that VA Linux hadn’t turned a dime in profits and had no expectation of doing so did little to deter trading. Investors pushed the price upward on a gamble that the public would see the fledgling company . . . as a rival to Microsoft”]).

      . The practices alleged in the complaint are commonly referred to as “spinning” and “flipping.” Spinning refers to the preferential allocation of the right to buy shares in an IPO, often to company managers or venture capitalists, who may quickly resell or “flip” these shares in the aftermarket for large profits.

      . The syndicate was the ad hoc group of underwriters who banded together to underwrite—that is, purchase—from eToys, the issuer/seller, at a fixed price less the discount (6.75%) and to distribute eToys’ new securities.

      . SROs are quasi-governmental entities with, “a duty to promulgate and enforce rules governing the conduct of [their] members” (Barbara v New York Stock Exch., Inc., 99 F3d 49, 51 [2d Cir 1996]; see 15 USC § 78c [a] [26]; § 78f [b]; § 78s [g]). The SEC must approve or reject any rule, practice, policy or interpretation proposed by an SRO (see 15 USC § 78s [b]; Barbara, 99 F3d at 51 [describing the role of SROs in enforcement of federal securities laws and SRO rules or regulations]).

      . Specifically, the proposed rules would (1) prohibit IPO allocations as a consideration or inducement for the receipt of compensation that is excessive in relation to the services provided by the member or member organization (so-called “quid pro quo” allocations); (2) prohibit the awarding of IPO shares to executive officers and directors and their household members of issuers that have, or will have, an investment banking relationship with the member or member organization on the condition that such officers and directors, on behalf of the issuer, direct future investment banking business to the member or member organization (i.e., spinning); (3) prohibit the imposition of a flipping penalty (a “penalty bid”) on associated persons whose customers flipped IPO shares unless such penalty is imposed on the entire underwriting syndicate; and (4) require the book-running lead manager, who is responsible for assembling pre-price indications of interest in an underwritten transaction, to provide the issuer’s pricing committee (or, if the issuer has no pricing committee, its board of directors) with (a) a regular report of indications of interest, including the names of interested institutional investors and the number of shares indicated by each, and a report of aggregate demand from retail investors (which the SROs characterized as conforming the rules to existing practices); and (b) a report on final allocations within a reasonable time after the IPO’s settlement date. These proposed rules would also extend lock-up agreements (i.e., formal restrictions on resale of securities) to officers’ and directors’ issuer-directed shares (e.g., so-called “friends and family” programs) and require the book-running lead manager to notify the issuer and the public (through a major news service) at least two days prior to the release or waiver of any lock-up or other restriction on the transfer of the issuer’s shares; specify how the book-running lead manager and other syndicate members must deal with returned shares; and prohibit members from accepting market orders to purchase IPO shares in the aftermarket for one trading day following an IPO (see also 69 Fed Reg, at 77,813-77,814 [discussing three possible new approaches for regulating unseasoned issuers, whose stocks experienced dramatic run-ups and declines in price during the late 1990’s and 2000, and the factors, both objective and subjective, that bear upon establishing an offering price]).


author: Chief Judge Kaye.

text:
    [832 NE2d 38, 799 NYS2d 182]
    In the Matter of Best Payphones, Inc., Appellant, v Department of Information Technology and Telecommunications of the City of New York, Respondent.
    Argued April 27, 2005;
    decided June 9, 2005

      POINTS OF COUNSEL

      Mayne Miller, New York City, for appellant.
    I. The letter of Bruce Regal dated January 13, 2000 was neither final nor binding within the meaning of CPLR 217 and therefore cannot have started the running of the statute of limitations for the within CPLR article 78 proceeding. (Matter of Village of Westbury v Department of Transp. of State of N.Y., 146 AD2d 578, 75 NY2d 62; Matter of Raffaele v Town of Orangetown, 224 AD2d 430; Church of St. Paul & St. Andrew v Barwick, 67 NY2d 510, 479 US 985; Williamson County Regional Planning Commn. v Hamilton Bank of Johnson City, 473 US 172; Matter of Essex County v Zagata, 91 NY2d 447; Legal Aid Socy. v City of New York, 242 AD2d 423; Matter of Mateo v Board of Educ. of City of N.Y., 285 AD2d 552; Matter of Alterra Healthcare Corp. v Novello, 306 AD2d 787; Matter of Main Seneca Corp. v Erie County Indus. Dev. Agency, 125 AD2d 930; Matter of Queensborough Community Coll. of City Univ. of N.Y. v State Human Rights Appeal Bd., 41 NY2d 926.) II. Petitioner’s submission of the franchise agreement with a reservation of rights satisfied the conditions of the resolution of the Franchise and Concession Review Committee, entitling petitioner to issuance of a payphone franchise. (TCG N.Y., Inc. v City of White Plains, 305 F3d 67.) III. Inasmuch as the statute of limitations for a CPLR article 78 proceeding did not begin to run on January 13, 2000, the service of the petition acknowledged by respondent was not untimely, and there is no need to remand the proceeding for a traverse hearing. IV The Appellate Division erred by considering the question of the statute of limitations raised in dictum in the judgment of the court below before addressing whether there was a viable proceeding at all in view of the lower court’s dismissal for lack of personal jurisdiction without holding a traverse hearing. (Banco do Brasil v Madison S.S. Corp., 61 Misc 2d 1028; Matter of Walker v State of N.Y., Dept. of Taxation

      & Fin., 300 AD2d 958; Bell v New York Higher Educ. Assistance Corp., 129 Misc 2d 169, 119 AD2d 473; 527 Madison Ave. Co. v DeLoy Exec. Serv., 36 AD2d 502.)

      Michael A. Cardozo, Corporation Counsel, New York City (Suzanne K. Colt, Pamela Seider Dolgow and Michael S. Adler of counsel), for respondent.
    I. The Appellate Division properly affirmed the Supreme Court’s finding that petitioner’s claims, having accrued by January 13, 2000, are time-barred pursuant to CPLR 217, requiring dismissal of those claims. Specifically as to petitioner’s claim regarding the May 2000 removal of its payphones, petitioner’s failure to timely challenge the conditions set forth in the January 13, 2000 letter also required dismissal of that claim. (Matter of Waldeck v New York City Employees’ Retirement Sys., 81 NY2d 804; Matter of McDermott v Forsythe, 188 AD2d 173; Matter of Waterside Assoc. v New York State Dept. of Envtl. Conservation, 72 NY2d 1009; Matter of Crescent Estates Water Co. v Public Serv. Commn. of State of N.Y., 77 NY2d 611; Matter of Tottey v Varvayanis, 307 AD2d 652, 1 NY3d 501; Matter of Village of Westbury v Department of Transp. of State of N.Y., 75 NY2d 62; Matter of Johnson v New York City Employees’ Retirement Sys., 277 AD2d 136; Parker v Fahey, 74 AD2d 669; Feraca v Town of Esopus, 63 AD2d 771; Matter of Simmons v Popolizio, 160 AD2d 368, 78 NY2d 917.) II. Even assuming arguendo that the petition is not entirely time-barred, the Supreme Court properly found that the petition was not served timely. The record contained persuasive evidence that the petition had been served a full month late, which was not refuted by any probative contrary proof from petitioner. (Matter of Eldor Contr. Corp. v Town of Islip, 277 AD2d 233; Horowitz v Incorporated Vil. of Roslyn, 144 AD2d 639, 74 NY2d 835; Sutherland v Village of Suffern, 139 AD2d 728; Mariano v Steinberg, 87 AD2d 606; Le Fevre v Cole, 92 AD2d 720; Mrwik v Mrwik, 49 AD2d 750; Hoerning v Stihl Am., 70 AD2d 696; Flick v Stewart-Warner Corp., 76 NY2d 50; Turkish v Turkish, 126 AD2d 436.)
   OPINION OF THE COURT

Chief Judge Kaye.

At issue before us is the date when an administrative determination became “final and binding upon the petitioner,” so as to trigger the four-month limitations period for CPLR article 78 review (CPLR 217 [1]).

Petitioner, Best Payphones, Inc., owned and operated sidewalk payphones in New York City. Respondent, the New York City Department of Information Technology and Telecommunications (DOITT), regulates pay telephone operations on city streets. On August 11, 1999, the City approved petitioner’s payphone franchise, subject to certain conditions, including the execution and delivery of a Franchise Agreement.

On January 13, 2000, DOITT notified petitioner that, because it did not submit executed copies of the Franchise Agreement and other required closing documents, it “failed to meet an essential condition of [city] approval, and the [City] can therefore be deemed to have determined not to approve a franchise for Best.” The letter went on to state that Best had 60 days to enter into an agreement to sell its payphones to an entity that had been awarded a public pay telephone franchise by the City, or to remove its public pay telephones from the City’s property, or to submit executed copies of the Franchise Agreement and all required closing documents. If petitioner failed within 60 days to pursue one of those courses, the letter continued, its phones would be subject to removal from city property and Best would be considered for all purposes a nonholder of a city franchise.

Best took none of the three options within the 60-day period. Thus, in early May 2000, the City issued notices of violation for illegal maintenance of such phones and began removing petitioner’s phones from city property. On May 10, 2000, petitioner executed and delivered the Franchise Agreement to DOITT. On June 19, 2000, the City notified petitioner that it was unlawfully maintaining public telephones on city property.

On July 11, 2000, Best filed this article 78 petition seeking to compel DOITT to accept the executed Franchise Agreement, compel DOITT to allow it to sell its assets to another entity and, if necessary, to compel DOITT to allow petitioner to reapply for a franchise. Petitioner alleged that DOITT selectively imposed unlawful and discriminatory procedures and arbitrary deadlines on it, which resulted in the denial of a franchise. DOITT sought an order dismissing the petition pursuant to CPLR 217 and 306-b on the grounds that all but one of Best’s claims were barred by the statute of limitations and that service of process was untimely as to all claims.

Supreme Court dismissed the petition on the ground of improper service. Although stating that it need not even reach the statute of limitations issue, the court found petitioner’s claims barred by the four-month statute of limitations, reasoning that petitioner’s claims accrued at the latest on January 13, 2000. The Appellate Division affirmed on the statute of limitations ground alone, agreeing that the agency determination became final and binding on January 13, and the petition was therefore untimely. We agree.

An article 78 proceeding must be brought “within four months after the determination to be reviewed becomes final and binding upon the petitioner” (CPLR 217 [1]). A strong public policy underlies the abbreviated statutory time frame: the operation of government agencies should not be unnecessarily clouded by potential litigation (see Solnick v Whalen, 49 NY2d 224, 232 [1980]).

This Court has identified two requirements for fixing the time when agency action is “final and binding upon the petitioner.” First, the agency must have reached a definitive position on the issue that inflicts actual, concrete injury and second, the injury inflicted may not be prevented or significantly ameliorated by further administrative action or by steps available to the complaining party (see e.g. Stop-The-Barge v Cahill, 1 NY3d 218, 223 [2003]; Matter of Essex County v Zagata, 91 NY2d 447, 453 [1998]; see also Church of St. Paul & St. Andrew v Barwick, 67 NY2d 510, 519, 521 [1986], cert denied 479 US 985 [1986] [ripeness for review]).

In Essex, for example, we found agency action final when petitioner was notified that it was required to file a new application for its landfill proposal with the Adirondack Park Agency (APA) (91 NY2d at 451). At that point, the agency “left no doubt that there would be no further administrative action and that the expenditure of additional litigation expense and effort before the APA would do nothing to change the agency’s position or alleviate appellants’ injury” (id. at 454). Here, similarly, DOITT’s January 13, 2000 letter left no doubt that the agency had reached a definitive position regarding petitioner’s payphones that inflicted actual, concrete injury on Best. DOITT notified petitioner that it had to execute the agreement as proposed, sell the business to an approved entity or remove the phones. The 60-day grace period offered petitioner no opportunity to ameliorate the injury, or to avoid it, except by agreeing to the agency’s demands. The January 13 letter held out no hope of further administrative action, or change in the agency’s position, but left petitioner only with the choice of accepting DOITT’s position or initiating suit. Thus, DOITT’s action was final and binding upon petitioner on January 13, and its article 78 petition filed in July was untimely.

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

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

Order affirmed, with costs.

       The City did not challenge, as time-barred, petitioner’s claim that the City improperly removed its payphones in May 2000. The trial court, however, correctly found that claim untenable based on the lack of timeliness of the other claims.