author: Jones, J.

text:
    [919 NE2d 172, 891 NYS2d 1]
    Executive Risk Indemnity Inc., Appellant, v Pepper Hamilton LLP et al., Respondents. Pepper Hamilton LLP et al., Third-Party Plaintiffs-Respondents, v Continental Casualty Company et al., Third-Party Defendants-Appellants.
    Argued September 9, 2009;
    decided October 20, 2009

      POINTS OF COUNSEL

      Kornstein, Veisz Wexler & Pollard, LLP, New York City (William B. Pollard, III, and Amy C. Gross of counsel), for appellant.
    I. The prior knowledge exclusions are required to be applied as written. (Read v Lehigh Val. R.R. Co., 284 NY 435; Moscow Fire Ins. Co. v Bank of N.Y. & Trust Co., 280 NY 286; Zurich Ins. Co. v Shearson Lehman Hutton, 84 NY2d 309; Loucks v Standard Oil Co. ofN.Y., 224 NY 99; Cooney v Osgood Mach., 81 NY2d 66; Finucane v Interior Constr. Corp., 264 AD2d 618; Welsbach Elec. Corp. v MasTec N. Am., Inc., 7 NY3d 624; Coregis Ins. Co. v Wheeler, 24 F Supp 2d 475; Ehrgood v Coregis Ins. Co., 59 F Supp 2d 438; Westport Ins. Corp. v Atchley, Russell, Waldrop & Hlavinka, L.L.P., 267 F Supp 2d 601.) II. Even under a de novo review, the prior knowledge exclusions are unambiguous and are required to be applied as written under Pennsylvania and New York law. (White v Knickerbocker Ice Co., 254 NY 152; State of New York v R.J. Reynolds Tobacco Co., 304 AD2d 379; Teichman v Community Hosp. ofW. Suffolk, 87 NY2d 514; Greenfield v Philles Records, 98 NY2d 562; White v Continental Cas. Co., 9 NY3d 264; Zion v Kurtz, 50 NY2d 92; Shilbury v Board of Supervisors of County of Sullivan, 54 Misc 2d 979; United States v Gonzales, 520 US 1; Maine v Thiboutot, 448 US 1; Seaport Park Condominium v Greater N.Y. Mut. Ins. Co., 39 AD3d 51.)

      Cozen O’Connor, New York City (Kevin M. Mattessich, Jacob C. Cohn and Patrick M. Kennell of counsel), for Continental Casualty Company, third-party defendant-appellant.
    I. The First Department misconstrued the standards for defining and weighing a potential insured’s “subjective” and “objective” knowledge. (Seaboard Sur. Co. v Gillette Co., 64 NY2d 304; Vander Veer v Continental Cas. Co., 34 NY2d 50; Mt. Airy Ins. Co. v Thomas E. Angst & Assoc., P.C., 954 F Supp 1040; Justofin v Metropolitan Life Ins. Co., 372 F3d 517;
      National Union Ins. Co. of Pittsburgh, Pa. v Holmes & Graven, 23 F Supp 2d 1057; Professional Mgrs., Inc. v Fawer, Brian, Hardy & Zatzkis, 799 F2d 218; Coregis Ins. Co. v Mc-Collum, 961 F Supp 1572.) II. Pepper Hamilton LLP’s suppression of material information on its applications warrants rescission of the policies issued by Continental Casualty Company. (Process Plants Corp. v Beneficial Natl. Life Ins. Co., 53 AD 2d 214; Kagan v United States Life Ins. Co., 21 AD2d 846; Alvarez v Prospect Hosp., 68 NY2d 320; Zuckerman v City of New York, 49 NY2d 557; Bauer v Whispering Hills Assoc., 210 AD2d 569; Smalls v Reliable Auto Serv., 205 AD2d 523; Matinchek v John Alden Life Ins. Co., 93 F3d 96; Jung v Nationwide Fire Ins. Co., 949 F Supp 353.) III. The First Department erred in rejecting, as a matter of law, evidence demonstrating the materiality of Pepper Hamilton LLP’s suppression. (Feldman v Friedman, 241 AD2d 433; Chicago Ins. Co. v Kreitzer & Vogelman, 210 F Supp 2d 407; Bleecker St. Health & Beauty Aids, Inc. v Granite State Ins. Co., 11 Misc 3d 1091[A], 2006 NY Slip Op 50817[U]; In re WorldCom, Inc. Sec. Litig., 354 F Supp 2d 455; Arnav Indus., Inc. Retirement Trust v Brown, Raysman, Millstein, Felder & Steiner, 96 NY2d 300; Continental Cas. Co. v Graham & Schewe, 339 F Supp 2d 723; Westport Ins. Corp. v Gionfriddo, 524 F Supp 2d 167; Commonwealth Land Tit. Ins. Co. v IDC Props., Inc., 524 F Supp 2d 155; Admiral Ins. Co. v Debber, 442 F Supp 2d 958; In re Marvel Entertainment Group, Inc., 140 F3d 463.)

      Hogan & Hartson LLP (Catherine E. Stetson, of the District of Columbia bar, admitted pro hac vice, and Jessica L. Ellsworth of counsel), and Edwards Angelí Palmer & Dodge LLP, New York City (Ira G. Greenberg, John F. McCarrick, Samuel B. Mayer and Scott H. Casher of counsel), for Twin City Fire Insurance Company, third-party defendant-appellant.
    Under the correct legal standard for applying a prior knowledge exclusion, Twin City Fire Insurance Company’s denial of coverage to Pepper Hamilton LLP was proper. (Coregis Ins. Co. v Baratía & Fenerty, Ltd., 264 F3d 302; Seiko v Home Ins. Co., 139 F3d 146; Colliers Lanard & Axilbund v Lloyds of London, 458 F3d 231; Westport Ins. Corp. v Lilley, 292 F Supp 2d 165; MBIA Ins. Corp. v Royal Indem. Co., 426 F3d 204; Mt. Airy Ins. Co. v Thomas, 954 F Supp 1073; Ehrgood v Coregis Ins. Co., 59 F Supp 2d 438; Coregis Ins. Co. v Wheeler, 24 F Supp 2d 475; Coregis Ins. Co. v McCollum, 961 F Supp 1572; Fujitsu Ltd. v Federal Express Corp., 247 F3d 423.)

      Cahill Gordon & Reindel LLP, New York City (Charles A. Gil-man and Christopher A. Gorman of counsel), and Dickstein Shapiro LLP {.Randy Paar and Edward Tessler of counsel) for Pepper Hamilton LLP and another, respondents and third-party plaintiffs-respondents.
    I. Disputed issues of material fact preclude summary judgment. (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851; Friends of Animals v Associated Fur Mfrs., 46 NY2d 1065; Patrolmen’s Benevolent Assn, of City of N.Y. v City of New York, 27 NY2d 410; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Ferrante v American Lung Assn., 90 NY2d 623; Colliers Lanard & Axilbund v Lloyds of London, 458 F3d 231; Sacher v Long Is. Jewish-Hillside Med. Ctr., 142 AD2d 567.) II. Twin City Fire Insurance Company and Executive Risk Indemnity Inc. fail to satisfy their heavy burdens to prove a prior knowledge exclusion to insurance coverage. (Belt Painting Corp. v TIG Ins. Co., 100 NY2d 377; Ace Wire & Cable Co. v Aetna Cas. & Sur. Co., 60 NY2d 390; Westview Assoc, v Guaranty Natl. Ins. Co., 95 NY2d 334; Continental Cas. Co. v Rapid-American Corp., 80 NY2d 640; United Natl. Ins. Co. v Granoff, Walker & Forlenza, PC., 598 F Supp 2d 540; Seiko v Home Ins. Co., 139 F3d 146; Westport Ins. Corp. v Hanft & Knight, PC., 523 F Supp 2d 444; Coregis Ins. Co. v Wheeler, 24 F Supp 2d 475.) III. Even if a trier of fact were to determine that Pepper Hamilton LLP had prior knowledge, the Westport Insurance Corporation primary policy mandates coverage under the 2001/2002 insurance program. (Retirement Fund of Fur Mfg. Indus. v Republic Ins. Co., 755 F Supp 625; DiLuglio v New England Ins. Co., 959 F2d 355; DeVanzo v Newark Ins. Co., 37 NY2d 733.) IV Continental Casualty Company is not entitled to rescission of its policies. (Fidelity & Guar. Ins. Underwriters, Inc. v Jasam Realty Corp., 540 F3d 133; First Financial Ins. Co. v Allstate Interior Demolition Corp., 193 F3d 109; Justofin v Metropolitan Life Ins. Co., 372 F3d 517; Mt. Airy Ins. Co. v Thomas E. Angst & Assoc., P.C., 954 F Supp 1040; Almap Holdings v Bank Leumi Trust Co. of N.Y., 196 AD2d 518, 83 NY2d 754; Coolspring Stone Supply, Inc. v American States Life Ins. Co., 10 F3d 144; United Natl. Ins. Co. v Granoff, Walker & Forlenza, PC., 598 F Supp 2d 540; Chicago Ins. Co. v Halcond, 49 F Supp 2d 312; Montgomery v Federal Ins. Co., 836 F Supp 292; Matinchek v John Alden Life Ins. Co., 93 F3d 96.)

      Walker Wilcox Matousek, LLP {Robert P. Conlon and Joyce F. Noyes, of the Illinois bar, admitted pro hac vice, of counsel), and Garbarini & Scher, P.C., New York City (William D. Buckley and Gregg D. Weinstock of counsel), for Westport Insurance Corporation, respondent.
    I. The First Department’s decision incorporated the correct finding that the tolling agreement constituted a “claim.” (Gurfein Bros, v Hanover Ins. Co., 248 AD2d 227; Caguas Cent. Fed. Sav. Bank v United States, 215 F3d 1304.) II. If this Court concludes that the tolling agreement did not constitute a claim, further discovery is necessary to determine whether a claim was otherwise made on or before April 27, 2004. (Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494; Groves v Land’s End Hous. Co., 80 NY2d 978; OK Petroleum Distrib. Corp. v Nassau/Suffolk Fuel Oil Corp., 17 AD3d 551; Metichecchia v Palmeri, 23 AD 3d 894.) III. In the event Pepper Hamilton LLP’s notice was of a potential claim, the First Department’s reversal on the prior knowledge exclusion precludes relation back prior to year three. IV In the event Pepper Hamilton LLP’s notice was of a potential claim, questions of fact remain regarding when Pepper Hamilton LLP first became aware of a potential claim.

      Harkins Cunningham LLP, Philadelphia, Pennsylvania (Marianne Consentino, John G. Harkins, Jr., and Benjamin M. Gerber of counsel), for Philadelphia Bar Association, amicus curiae.
    I. Insurance policy disclosures are about whether the law firm has done something wrong—not about whether the client has. (Seiko v Home Ins. Co., 139 F3d 146; Coregis Ins. Co. v Baratía & Fenerty, Ltd., 264 F3d 302; Westport Ins. Corp. v Hanft & Knight, PC., 523 F Supp 2d 444; United Natl. Ins. Co. v Granoff, Walker & Forlenza, PC., 598 F Supp 2d 540.) II. The motion court’s approach will impermissibly strain Pennsylvania lawyers’ relations with their clients. III. The motion court’s approach will inappropriately and substantially burden Pennsylvania lawyers. (Seiko v Home Ins. Co., 139 F3d 146; Coregis Ins. Co. v Baratía & Fenerty, Ltd., 264 F3d 302.)
   OPINION OF THE COURT

Jones, J.

We are asked to determine, under Pennsylvania law, whether excess insurers Executive Risk Indemnity Inc. and Twin City Fire Insurance Company, based upon their prior knowledge exclusions, and Continental Casualty Company, based upon rescission of its policies, were entitled to summary judgment declaring that they have no obligation to indemnify defendants Pepper Hamilton LLP and one of its members W. Roderick Gagné (collectively, the law firm defendants) in actions asserted against them for, among other claims, professional malpractice. We conclude that the prior knowledge exclusions apply and modify the order of the Appellate Division by granting summary judgment to Executive Risk and Twin City. We also conclude that Continental Casualty is not entitled to summary judgment on the basis of rescission.

Facts and Procedural History

The underlying actions arose out of the law firm defendants’ representation of nonparties Student Finance Corporation (SFC), its principal, Andrew Yao, and Royal Indemnity Company. In 1992, Yao founded SFC, a company that serviced the vocational portion of the student loan market. SFC financed loans to students attending vocational schools and acquired student loans from other lenders. It pooled those loans into certificates and sold them to investors. Defendant Gagné, then an associate of a nonparty law firm, assisted with SFC’s formation in 1992 and its securitization in 1996. In 1996, Gagné became a member of Pepper Hamilton, a law firm based in Philadelphia, and brought Yao and SFC with him as clients. In the course of Pepper Hamilton’s representation of SFC, the law firm prepared eight private placement memoranda in 2000 and 2001, which SFC used in connection with the sale of certificates totaling more than $465 million. Gagné also participated in discussions concerning SFC’s operations with Yao. Royal Indemnity, a client of Pepper Hamilton, provided SFC with credit risk insurance for the pooled loans from 1999 to 2001.

From April 27, 2001 to October 27, 2002, Pepper Hamilton had two policies, $20 million of primary coverage under the Westport policy and $30 million of excess coverage under the Continental Casualty policy. In October 2002, the law firm decreased its coverage from $50 million to $40 million and obtained policies with two additional insurers, Executive Risk and Twin City. In the subsequent years, from October 27, 2002 to October 27, 2003 and October 27, 2003 to October 27, 2004, Westport issued a $10 million primary coverage policy to Pepper Hamilton, and Twin City, Executive Risk and Continental Casualty each issued Pepper Hamilton $10 million of excess coverage. Each excess policy substantially incorporated the terms, conditions, warranties and exclusions of the Westport policy.

The Westport policy excludes:

“any act, error, omission, circumstance or PERSONAL INJURY occurring prior to the effective date of this POLICY if any INSURED at the effective date knew or could have reasonably foreseen that such act, error, omission, circumstance or PERSONAL INJURY might be the basis of a CLAIM. This exclusion does not apply to any INSURED who had no knowledge or could not have reasonably foreseen that such act, error, omission, circumstance or PERSONAL INJURY might be the basis of a claim.”

In March 2002, months before Executive Risk and Twin City issued their respective policies to Pepper Hamilton, the law firm defendants learned that SFC had been involved in securities fraud in failing to disclose the forbearance payments. Yao informed Gagné that SFC was inaccurately representing its default rate to make its certificates appear more attractive to investors, underwriters and credit risk insurers. Specifically, SFC made forbearance payments from its reserve accounts on student loans that were more than 90 days past due. Pepper Hamilton continued to represent SFC until April 2002.

On July 22, 2002, Chubb Wilcox, Pepper Hamilton’s general counsel and insurance procurer, sent a memorandum to Pepper Hamilton attorneys regarding the firm’s insurance application and inquired whether any person was “aware of any fact or circumstance, act, error, omission or personal injury which might be expected to be the basis of the claim or suit for lawyers professional liability.” On August 6, 2002, Gagné responded: “I am aware [of] the Student Finance Corporation transactions of which you are familiar . . . [T]wo law suits have been filed in two different states and to date, we have not been named in either action. I am not certain as to whether we will be joined in the future.” On September 6, 2002, Pepper Hamilton submitted a signed and dated insurance application to Westport, which did not include information concerning SFC, and in a letter to Twin City, dated October 25, 2002, Pepper Hamilton warranted that it had no material changes to its application. Pepper Hamilton did not disclose information concerning SFC to any of its insurers.

Eventually, SFC was forced into bankruptcy. In April 2004, Pepper Hamilton received a proposed tolling agreement from SFC’s bankruptcy trustee, which advised that valid claims and causes of action could be brought against Pepper Hamilton “on behalf of the estate and/or creditors of’ SFC. Pepper Hamilton immediately contacted its primary insurer Westport and excess insurers Executive Risk, Twin City and Continental Casualty and informed them of the potential claims.

In 2004 and 2005, the bankruptcy trustee and Royal Indemnity brought separate actions against the law firm defendants, alleging, among other claims, breach of fiduciary duty, negligent misrepresentation and professional malpractice. Pepper Hamilton’s primary insurer, Westport, did not contest its obligation to defend. However, the excess insurers denied coverage.

Executive Risk commenced this action against the law firm defendants and Westport, seeking a declaration that it had no obligation to indemnify defendants in the underlying actions. The law firm defendants counterclaimed for a declaration in their favor and brought third-party claims against Twin City and Continental Casualty. Executive Risk and Twin City relied upon Westport’s prior knowledge exclusion, expressly incorporated into their policies, and Continental Casualty cross-claimed for rescission of its excess policies for 2002-2003 and 2003-2004.

Supreme Court granted summary judgment in favor of the excess insurers. The court declared that, based on the policies’ prior knowledge exclusions, which deny professional liability coverage for undisclosed acts that were known to the insured prior to the inception of the policies and exposed the insured to professional liability claims, Executive Risk and Twin City had no obligation to indemnify the law firm defendants in the underlying actions. Additionally, Supreme Court rescinded the law firm defendants’ 2002-2003 and 2003-2004 Continental Casualty professional liability policies because they did not disclose information, during the renewal periods of those policies, concerning known acts that exposed them to the underlying professional liability claims. The court further declared that the underlying actions were not covered under the 2001-2002 Continental Casualty policy. The Appellate Division reversed the Supreme Court order and denied all motions and a cross motion for summary judgment (56 AD3d 196 [2008]). The Appellate Division granted the excess insurers leave to appeal and certified the following question to this Court: “Was the order of this Court, which reversed the order of the Supreme Court, properly made?” We now modify and answer the certified question in the negative.

Analysis

Prior Knowledge Exclusions

Under Pennsylvania law, the insured has the burden of proving that its claim falls “within the policy’s affirmative grant of coverage” (Koppers Co., Inc. v Aetna Cas. & Sur. Co., 98 F3d 1440, 1446 [3d Cir 1996]). The insurer, however, carries “the burden of proving the applicability of any exclusions or limitations on coverage” (id.). A court must consider the following two-pronged test when determining whether a prior knowledge exclusion applies. It must “first . . . consider the subjective knowledge of the insured and then the objective understanding of a reasonable attorney with that knowledge” (Coregis Ins. Co. v Baratta & Fenerty, Ltd., 264 F3d 302, 306 [3d Cir 2001]). Specifically, “it must be shown that the insured knew [prior to the effective date of the policy] of certain facts” that occurred prior to that effective date (id., quoting Seiko v Home Ins. Co., 139 F3d 146, 152 [3d Cir 1998]). Then, a court must determine that a “reasonable lawyer in possession of such facts would have had a basis to believe that the insured” might expect such facts to be the basis of a claim against the insured (id.).

Here, it is undisputed that the law firm defendants knew of SFC’s securities fraud months prior to the effective dates of the Executive Risk and Twin City policies. The courts below noted that Gagné subjectively believed, and informed Mr. Wilcox at least one month prior to the submission of one of the law firm’s insurance applications, that he and the law firm could be subject to a lawsuit from their representation of SFC. Such a belief, although subjective, was also reasonable, but Pepper Hamilton did not provide that information to its insurers. Given the law firm defendants’ role in the securitization of the loans and Gagné’s close involvement with SFC, a reasonable attorney with the law firm defendants’ knowledge should have anticipated the possibility of a lawsuit, particularly when millions of dollars may have been lost from activities of which they were aware. Here, the law firm’s knowledge of its client’s fraudulent payments prior to its application for excess coverage coupled with the fact that a reasonable attorney would have concluded that the law firm defendants would likely be included in the litigation because of their role in their client’s business satisfy the test of Coregis and create an obligation for the law firm to inform its insurers of this potential litigation.

Contrary to the Appellate Division’s holding, the prior knowledge exclusion in this case does not require the known-of act, error, omission or circumstance to be “wrongful conduct on the part of the insured” (Executive Risk Indent. Inc. v Pepper Hamilton LLP, 56 AD3d 196, 204 [1st Dept 2008]). It excludes coverage of “any act, error, omission [or] circumstance . . . occurring prior to the effective date of [the policy] if any [insured] at the effective date knew or could have reasonably foreseen that such act, error, omission [or] circumstance . . . might be the basis of a [claim].” Here, on October 27, 2002, the effective date of the Executive Risk and Twin City policies, the law firm defendants knew of acts that occurred prior to that date, which they could have foreseen to be the basis of a claim. Thus, the prior knowledge exclusions apply to those policies.

Rescission

It is well-settled under Pennsylvania law that rescission of an insurance policy may occur only if the (1) applicant made a false statement, (2) the false statement was material to the risk, (3) the applicant knew the statement was false and (4) the statement was made in bad faith (Allstate Ins. Co. v Stinger, 400 Pa 533, 540-541, 163 A2d 74, 78 [I960]). The insurer must prove all elements by clear and convincing evidence (Justofin v Metropolitan Life Ins. Co., 372 F3d 517, 521 [3d Cir 2004]). Pennsylvania recognizes an omission as a false representation in the context of insurance applications (id. at 522).

We agree with the Appellate Division that, even if the law firm defendants’ omission of the SFC incident is a known false statement, Continental Casualty failed to establish as a matter of law that the false statement was material to the reinsurance determination and that the false statement was made in bad faith. Here, the self-serving affidavit of Continental Casualty’s underwriter—that Pepper Hamilton’s renewal application would have been treated differently had it disclosed the underlying circumstances which led to the denial of coverage—is insufficient to meet the insurer’s heightened burden of proof. The Appellate Division correctly denied summary judgment on the issue of rescission.

Accordingly, the order of the Appellate Division should be modified, without costs, in accordance with the opinion herein and, as so modified, affirmed, and the certified question answered in the negative.

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

Order modified, etc.

       This policy is a claims made policy, which “protects against claims made during the life of a policy irrespective of when the act giving rise to the claim occurred” (Pizzini v American Inti. Specialty Lines Ins. Co., 210 F Supp 2d 658, 668 [ED Pa 2002]). The policy uniquely provides continuous and uninterrupted coverage.


source: Caselaw Access Project

author: Chief Judge Lippman.

license: Public Domain

text:
    [918 NE2d 933, 890 NYS2d 421]
    Georgia Hargett, Respondent, v Town of Ticonderoga et al., Appellants.
    Argued October 22, 2009;
    decided November 19, 2009

      POINTS OF COUNSEL

      FitzGerald Morris Baker Firth P.C., Glens Falls {John D. Aspland, Jr., of counsel), for appellants.
    The Eminent Domain Procedure Law does not allow for an award of attorney’s fees in cases such as this. (Matter of City of New York [Grand Lafayette Props. LLC], 6 NY3d 540; Matter of Rockland County Sewer Dish No. 1 v J. & J. Dodge, 213 AD2d 409; Matter of 49 WB, LLC v Village of Haverstraw, 44 AD3d 226; Matter of Agioritis, 52 AD2d 128; Matter of City of New Rochelle v O. Mueller, Inc., 191 AD2d 435.)

      Darrell W. Harp, Clifton Park, for respondent.
    Plaintiff, as a condemnee in the present matter, is entitled to reimbursement from defendants for all actual and necessary costs, disbursements and expenses she incurred in her successful EDPL article 2 challenge to the proposed taking of her property by eminent domain and her subsequent EDPL article 7 proceeding. {Matter

      of 49 WB, LLC v Village of Haverstraw, 44 AD3d 226; Matter of Broadway Schenectady Entertainment v County of Schenectady, 288 AD2d 672; Matter of Metropolitan Transp. Auth., 32 AD3d 943; Editorial Photocolor Archives v Granger Collection, 61 NY2d 517; Matter of City of New York [Grand Lafayette Props. LLC], 6 NY3d 540; Matter of Mitchell v Common Council of City of Oswego, 80 AD2d 722; Matter of Rockland County Sewer Dist. No. 1 v J. & J. Dodge, 213 AD2d 409; General Crushed Stone Co. v State of New York, 93 NY2d 23; Matter of City of New Rochelle v O. Mueller, Inc., 191 AD2d 435.)
   OPINION OF THE COURT

Chief Judge Lippman.

On this appeal, we must determine whether Eminent Domain Procedure Law (EDPL) § 702 (B) provides for reimbursement of attorney’s fees and costs when a condemnee successfully challenges a condemnor’s authority to acquire real property in proceedings pursuant to EDPL 207 (A). We conclude that EDPL 702 (B) provides for reimbursement under such circumstances, and the Appellate Division order should be affirmed.

In a prior action, the Appellate Division determined that the Superintendent of Highways of the Town of Ticonderoga exceeded his authority in seeking to condemn certain real property for purposes not related to his position (Matter of Hargett v Town of Ticonderoga, 35 AD3d 1122 [3d Dept 2006], Iv denied 8 NY3d 810 [2007]). The respondent on this appeal (the property owner in the prior action) subsequently commenced this litigation in Supreme Court, Essex County under EDPL 702 (B) seeking reimbursement of attorney’s fees and certain other costs allegedly incurred in connection with the prior proceeding and the Town’s efforts to condemn her property. Both sides moved for summary judgment. Finding no Appellate Division, Third Department case on point, the Supreme Court determined that it was bound by Matter of 49 WB, LLC v Village of Haverstraw (44 AD3d 226, 245-246 [2d Dept 2007])—where the Second Department found EDPL 702 (B) did not provide for reimbursement under these circumstances—and dismissed the complaint (18 Misc 3d 1138[A], 2008 NY Slip Op 50343[U]). The Appellate Division modified the. order by denying defendants’ cross motion for summary judgment dismissing the complaint, granting plaintiffs motion for summary judgment as to liability only and remitting to Supreme Court to determine the reasonable amount of her reimbursable costs and expenses (56 AD3d 1016 [2008]). It expressly noted its disagreement with the Second Department decision relied on by the lower court, and it determined that EDPL 702 (B) does provide for reimbursement under these circumstances.

The Appellate Division subsequently granted defendants’ motion for leave to appeal to this Court, certifying the following question:

“Did this Court err, as a matter of law, in modifying, on the law, the order of Supreme Court by reversing so much thereof as granted defendants’ cross motion and as denied plaintiffs motion in its entirety; denying defendants’ cross motion, granting plaintiff’s motion on the issue of liability, and remitting the matter to the Supreme Court for further proceedings not inconsistent with this Court’s decision and, as so modified, affirming the order?”

There is no cross appeal by plaintiff. The parties to this appeal have made no arguments as to which particular costs may be recompensed; rather, this appeal is limited to whether there is an entitlement to reimbursement.

Generally, a two-step process is required under the Eminent Domain Procedure Law before a condemnor obtains title to property for public use. The condemnor first makes a determination to condemn the property after invoking the hearing and findings procedures of EDPL 203 and 204 (Matter of City of New York [Grand Lafayette Props. LLC], 6 NY3d 540, 543 [2006]). Thereafter, the condemnor must seek the transfer of title to the property by commencing a judicial proceeding known as a vesting proceeding pursuant to EDPL article 4 (id.).

A person aggrieved by a condemnor’s determination and findings made pursuant to EDPL 204 may seek judicial review of the determination and findings in an original proceeding brought in the Appellate Division pursuant to EDPL 207. Judicial review must be sought “within thirty days after the condemnor’s completion of its publication of its determination and findings” (EDPL 207 [A]), and a “condemnee may not wait until the condemnor initiates a vesting proceeding to raise its claims” (Matter of City of New York, 6 NY3d at 549 n 4). Judicial review of a condemnor’s determination and findings at this first step of the process is limited by statute to certain issues, including whether “the proposed acquisition is within the condemnor’s statutory jurisdiction or authority” (EDPL 207 [C] [2]).

Attorney’s fees and costs are sought here pursuant to EDPL 702 (B), which provides:

“In the event that the procedure to acquire such property is abandoned by the condemnor, or a court of competent jurisdiction determines that the condemnor was not legally authorized to acquire the property, or a portion of such property, the condemnor shall be obligated to reimburse the condemnee, an amount, separately computed and stated, for actual and necessary costs, disbursements and expenses, including reasonable attorney, appraisal and engineering fees, and other damages actually incurred by such condemnee because of the acquisition procedure.”

Defendants argue that section 702 (B) provides for the reimbursement of attorney’s fees and expenses incurred only during the vesting proceeding, the second step of the EDPL’s process, and not for fees and expenses incurred during the first step of the process. We disagree.

It is true that the EDPL defines “acquisition” as the “act of vesting of title, right or interest to, real property for a public use, benefit or purpose, by virtue of the condemnor’s exercise of the power of eminent domain” (EDPL 103 [A]) and that section 702 (B) provides for the reimbursement of fees and costs incurred “because of the acquisition procedure” {see Matter of 49 WB, 44 AD3d at 245 [concluding that the “operative word of the statute is ‘acquisition’ ” and that section 702 (B) limits reimbursement to those fees and costs incurred as part of the “ ‘second step’ of eminent domain”]). But the EDPL also defines a “condemnee” as “the holder of any right, title, interest, lien, charge or encumbrance in real property subject to an acquisition or proposed acquisition” (EDPL 103 [C] [emphasis added]), and it is in the judicial review provided by EDPL 207 in which the condemnee may raise the issue of whether “the proposed acquisition is within the condemnor’s statutory jurisdiction or authority” (EDPL 207 [C] [2] [emphasis added]).

Given section 207 (A)’s 30-day statute of limitations to seek such judicial review, a condemnee may not sit on its claims until the second step when the condemnor commences a vesting proceeding (which a condemnor may do up to three years after making its determination and findings [EDPL 401 (A) (1)]). Rather, a condemnee must seek judicial review in the Appellate Division practically forthwith—before step two of the process. Thus, section 702 (B) provides for reimbursement to the condemnee who successfully challenges a “proposed acquisition” at the first step of the eminent domain process and obtains a judicial determination that the condemnor lacks the authority to pursue the proposed acquisition. Moreover, contrary to defendants’ argument, we can discern no reason why the Legislature would have been disposed to allowing condemnees successful in EDPL article 4 proceedings to obtain reimbursement while simultaneously barring the same relief to condemnees successful in EDPL article 2 proceedings.

We therefore conclude that reimbursement for attorney’s fees and other costs incurred by a condemnee may be sought pursuant to EDPL 702 (B) after it is determined in an EDPL article 2 proceeding that the condemnor lacked authority to pursue the proposed acquisition.

We should also note what we are not deciding today. The attorney’s fees and costs that may be reimbursed under section 702 (B) are expressly limited by the statute to those that are “actually incurred by such condemnee because of the acquisition procedure” (EDPL 702 [B]). Plainly, fees and costs incurred by a condemnee after a condemnor makes a determination and findings that are adverse to the condemnee pursuant to EDPL 203 and 204 are incurred “because of the acquisition procedure” (id.). However, we take no view here as to whether fees incurred before such an adverse determination may be said to be incurred “because of the acquisition procedure” within the meaning of EDPL 702 (B). Specifically, we do not decide today whether fees and costs incurred in preparing for and participating in an EDPL 203 public hearing after the condemnee has received notice of the hearing but prior to an adverse determination from the condemnor may be reimbursed under section 702 (B), nor do we decide whether fees and costs incurred prior to the receipt of formal notice of an EDPL 203 hearing may be reimbursed. These issues are not now before us because this appeal is limited to whether there is an entitlement to reimbursement.

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

Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.

Order affirmed, etc.

       In certain circumstances, pursuant to EDPL 206 the condemnor need not rely on the hearing and findings procedures of EDPL 203 and 204.


author: ClPARICK, J.

text:
    [918 NE2d 927, 890 NYS2d 415]
    The People of the State of New York, Respondent, v Michael J. Brown, Appellant.
    Argued October 14, 2009;
    decided November 19, 2009

      POINTS OF COUNSEL

      Appellate Advocates, New York City {Steven R. Bernhard and Lynn W.L. Fahey of counsel), for appellant.
    I. Appellant was denied his Sixth Amendment right to the effective assistance of counsel by his attorney’s failure to renew his pretrial dismissal motion when trial testimony revealed information at odds with the prosecution claim that “reasonable diligence” had been utilized to ascertain the assailant’s identity so as to extend the statute of limitations. (Strickland v Washington, 466 US 668; People v Baldi, 54 NY2d 137; People v Turner, 5 NY3d 476; People v Caban, 5 NY3d 143; People v Bennett, 29 NY2d 462; People v LaBree, 34 NY2d 257; People v Droz, 39 NY2d 457; People v Hobot, 84 NY2d 1021; Matter of Chad H., 278 AD2d 601; People v Grey, 257 AD2d 685.) II. The introduction of a DNA report from an outside laboratory, without testimony from anyone employed by, or personally familiar with, the procedures and protocols used by that lab in creating the report, violated appellant’s right to confrontation and New York’s foundational requirement for the report’s admission as a business record. (Crawford v Washington, 541 US 36; Davis v Washington, 547 US 813; People v Rawlins, 10 NY3d 136; People v Kennedy, 68 NY2d 569; People v Cratsley, 86 NY2d 81; Johnson v Lutz, 253 NY 124; Standard Textile Co. v National Equip. Rental, 80 AD2d 911; People v Grogan, 28 AD3d 579; People v Jenkins, 55 AD3d 850; People v Prado, 4 NY3d 725.)

      Richard A. Brown, District Attorney, Kew Gardens (William H. Branigan and John M. Castellano of counsel), for respondent.
    I. The Appellate Division correctly held that the subcontractor’s lab report, consisting of raw data of a single DNA sample, was properly admitted in evidence. (People v Rawlins, 10 NY3d 136; People v Freycinet, 11 NY3d 38; Crawford v Washington, 541 US 36; Davis v Washington, 547 US 813; People v Cratsley, 86 NY2d 81; People v Gray, 86 NY2d 10; People v Hawkins, 11 NY3d 484; Standard Textile Co. v National Equip. Rental, 80 AD2d 911; People v Kennedy, 68 NY2d 569.) II. Defense counsel provided effective representation. (People v Riley, 70 NY2d 523; People v Ramos, 99 NY2d 27; People v Parilla, 8 NY3d 654; People v Hobot, 84 NY2d 1021; People v Benevento, 91 NY2d 708; People v Brown, 7 NY2d 359; People v Rivera, 71 NY2d 705; People v Baldi, 54 NY2d 137; People v De Mauro, 48 NY2d 892; People v Jackson, 52 NY2d 1027.)
   OPINION OF THE COURT

ClPARICK, J.

The main issue raised on appeal is whether defendant’s Sixth Amendment right to confrontation was violated by the introduction of a DNA report processed by a subcontractor laboratory to the Office of the Chief Medical Examiner (OCME) through the testimony of a forensic biologist from OCME. Because the report is “nontestimonial,” we hold that its admission did not constitute a Crawford violation (see Crawford v Washington, 541 US 36 [2004]; Melendez-Diaz v Massachusetts, 557 US —, 129 S Ct 2527 [2009]).

I

The People alleged that on the morning of August 6, 1993, as the nine-year-old female victim was walking to her friend’s apartment in Queens, defendant followed her inside the building to the fifth floor. Placing his hand over her mouth, he accosted her and brought her to the rooftop of the building. He then used a cigarette lighter to burn a plastic hair clip into her arm and threatened her if she resisted his sexual advances. When she did resist, he picked up a brick and struck her in her head, temporarily knocking her unconscious. Upon awakening, she wore only a t-shirt that was covered in blood, and she had a footprint on her face from being kicked. She fled downstairs to her friend’s apartment and was taken to a local hospital.

Police interviewed the victim at the hospital. She told them that she did not know her attacker, nor was she able to describe him with any specificity, other than he was an African-American male in his mid-thirties. A canvas of the area yielded no additional evidence.

The hospital prepared a rape kit that was later sent to OCME. Due to a substantial backlog, OCME was unable to perform DNA testing on the rape kit at that time. On August 2, 2002, almost nine years after the crime, OCME received additional funding to address the backlog. It sent the rape kit, along with 225 others, to Bode Technology, one of at least three of its subcontracting laboratories, for testing. Bode is a private laboratory that is fully accredited. Shortly thereafter, Bode isolated a male DNA specimen from the rape kit, reflecting a string of numbers of all 13 areas of DNA. Bode further produced a DNA report containing machine-generated raw data, graphs and charts of the male specimen’s DNA characteristics.

Subsequently, the DNA characteristics were entered into the Combined DNA Index System. By June 2000, defendant’s DNA specimen had been recorded in the national database by Maryland police, upon his arrest for an unrelated matter. In February 2003, a routine search of the database registered a “cold hit,” linking defendant’s DNA to the profile found in the victim’s rape kit. A detective from the Queens Special Victims Squad took a DNA sample from defendant and delivered it to OCME. Thereafter, a forensic biologist/criminalist from OCME compared defendant’s DNA characteristics to the specimen from the victim’s rape kit. Based upon this analysis, she determined that the profiles were a match occurring in one out of one trillion males.

Defendant was charged with two counts of sodomy in the first degree, kidnapping in the second degree, three counts of assault in the second degree and endangering the welfare of a child. Before trial, he moved to dismiss the indictment on the ground that the statute of limitations had run, arguing that the People could not rely upon the five-year extension under CPL 30.10 (4) (a), where the whereabouts of the defendant are unknown and unascertainable, because police failed to exercise “reasonable diligence” in locating him. Supreme Court denied the motion, holding that the delay was caused by the child victim’s inability to identify her attacker and that defendant was arrested based upon DNA evidence found years later.

At trial, the victim provided a more ample description of her attacker, calling him “muscular.” She also testified that he asked her about members of her family, including her “Uncle Sol.” Defense counsel did not renew the motion to dismiss the indictment as time-barred based upon this additional evidence provided at trial by the victim.

The People called as a witness the forensic biologist/criminalist from OCME who analyzed defendant’s DNA profile. She testified that she supervised other criminalists at OCME, reviewed their reports and findings, and oversaw quality control management to ensure the laboratory’s procedures met appropriate standards. She stated that she had personally performed thousands of DNA tests and reviewed many more. The court granted the People’s application to have her deemed an expert in DNA testing and forensic biology. The witness then testified in depth as to the characteristics of DNA and about the testing protocols for all accredited crime laboratories in the United States, including OCME and Bode.

The People then moved to introduce the DNA report, containing a profile of the specimen taken from the victim’s rape kit, as a business record. Defense counsel objected, claiming that any documents generated by Bode were “testimonial evidence” that would violate defendant’s Sixth Amendment right to confrontation, unless the analyst who performed the test was present to testify. Defense counsel further asserted that the witness was not familiar with Bode’s quality assurance and how this particular test was performed. The People responded that the report contained merely raw data and was not testimonial, and that the witness herself had performed the analysis in comparing defendant’s profile with the profile of the DNA found in the rape kit. The People cited to People v Cratsley (86 NY2d 81 [1995]) and People v Kennedy (68 NY2d 569 [1986]), arguing that a business record can be introduced by a person who is not a custodian of records, provided that the other criteria for the business record exception are established. Initially, the court denied the application to admit the DNA report.

The OCME witness then testified that the Bode report consisted merely of raw data and contained no conclusions other than noting that there was a male specimen found in the victim’s rape kit. She stated that she drew her own scientific conclusions from analyzing the data and defendant’s DNA profile. She further noted that she was familiar with Bode’s procedures and protocols. The court then admitted the report into evidence. Subsequently, the jury convicted defendant of two counts of first-degree sodomy, two counts of second-degree assault and endangering the welfare of a child.

The Appellate Division affirmed the conviction, concluding that introduction of the DNA report did not violate defendant’s Sixth Amendment confrontation right, and further that there was no statute of limitations violation because defendant was not a suspect until the DNA evidence linked him to this crime (see 50 AD3d 1154 [2008]). A Judge of this Court granted defendant leave to appeal (11 NY3d 830 [2008]), and we now affirm.

II

The Sixth Amendment to the United States Constitution guarantees a defendant the right to be “confronted with the witnesses against him.” This provision bars “admission of testimonial statements of a witness who did not appear at trial unless he was unavailable to testify, and the defendant . . . had a prior opportunity for cross-examination” (Crawford, 541 US at 53-54). Only statements that are “testimonial” implicate the Sixth Amendment right to confront witnesses (see Davis v Washington, 547 US 813, 821 [2006]). In Crawford, the Court explained that “[testimony” is “[a] solemn declaration or affirmation made for the purpose of establishing or proving some fact” (541 US at 51 [internal quotation marks and citation omitted]). It includes “ex parte in-court testimony” and “extrajudicial statements,” such as “affidavits, custodial examinations, prior testimony that the defendant was unable to cross-examine, or similar pretrial statements that declarants would reasonably expect to be used prosecutorially” (id.).

In Melendez-Diaz, the United States Supreme Court recently held that “certificates of analysis” from a state laboratory concluding two essential elements of the charged crime, that the seized substance was cocaine and of a certain weight, without any testimony from the analysts who made such conclusions, violated defendant’s Sixth Amendment right to confront witnesses (557 US at —, 129 S Ct at 2532). The certificates were sworn to by the analysts before a notary public and were created for the “sole purpose” of being introduced in court during the prosecution of the case (id.). Under these circumstances, the Court held that the affidavits were “testimonial statements” and the analysts were “witnesses” for purposes of the Sixth Amendment (id.). The Court stated:

“The documents at issue here, while denominated by Massachusetts law certificates, are quite plainly affidavits: declaration^] of facts written down and sworn to by the declarant before an officer authorized to administer oaths. They are incontrovertibly a solemn declaration or affirmation made for the purpose of establishing or proving some fact. The fact in question is that the substance found in the possession of Melendez-Diaz and his codefendants was, as the prosecution claimed, cocaine—the precise testimony the analysts would be expected to provide if called at trial. The certificates are functionally identical to live, in-court testimony, doing precisely what a witness does on direct examination” (557 US at —, 129 S Ct at 2532 [internal quotation marks and citations omitted]).

In People v Meekins (10 NY3d 136 [2008]), a pre-MelendezDiaz case, we held that the introduction of a DNA report from a private subcontractor laboratory that tested the victim’s rape kit was not a Crawford violation, where the technicians who performed the test did not testify at trial. We concluded that the reports were not “testimonial” because the technicians merely recorded neutral testing procedures and the “graphical DNA test results, standing alone, shed no light on the guilt of the accused in the absence of an expert’s opinion that the results genetically match a known sample,” and such an expert did testify at the trial (id. at 159). In the companion case, People v Rawlins, however, we held that the introduction of a fingerprint analysis was “testimonial” because it was prepared by police solely to be entered at the subsequent trial against the defendant, and it was therefore offered upon a purely accusatory basis, to establish defendant’s identity at trial (see id. at 157). We have noted several other factors that may be relevant in considering whether a document is “testimonial” in a Crawford analysis: (1) whether the agency that produced the record is independent of law enforcement; (2) whether it reflects objective facts at the time of their recording; (3) whether the report has been biased in favor of law enforcement; and (4) whether the report accuses the defendant by directly linking him or her to the crime {see People v Freycinet, 11 NY3d 38, 41 [2008]).

Here, unlike Melendez-Diaz, the People called the forensic biologist who conducted the actual analysis at issue, linking defendant’s DNA to the profile found in the victim’s rape kit. She testified that she had personally examined the Bode file; she interpreted the profile of the data represented in the machine-generated graphs; and she made the critical determination linking defendant to this crime. She also stated that she was familiar with the procedures and protocols used by Bode, and defendant could have challenged such claim on cross-examination.

The Bode report, furthermore, was not “testimonial” under such circumstances because it consisted of merely machine-generated graphs, charts and numerical data. There were no conclusions, interpretations or comparisons apparent in the report since the technicians’ use of the typing machine would not have entailed any such subjective analysis. These technicians would not have been able to offer any testimony other than how they performed certain procedures. As the Court made clear in Melendez-Diaz, not everyone “whose testimony may be relevant in establishing the chain of custody, authenticity of the sample, or accuracy of the testing device, must appear in person as part of the prosecution’s case” (557 US at — n 1, 129 S Ct at 2532 n 1). The technicians who generated this report fit the definition of an “analyst” under Meekins, where we held that the DNA subcontractor’s report consisted of merely “raw data . . . in the form of nonidentifying graphical information” (10 NY3d at 158-159).

Finally, we see no merit to defendant’s contention that the results of the Bode procedures could have been tainted by a pro-law-enforcement bias to inculpate defendant. First, Bode’s report was conducted before defendant was ever a suspect in this case, thereby eliminating any pro-law-enforcement benefit to manipulating the results. Second, OCME and Bode are not law enforcement entities; they are scientific laboratories that work independently from the District Attorney and New York City Police Department. Third, the OCME witness testified that technician incompetence would not have led to defendant being accused. Any contamination resulting from mishandling the evidence or an error in using the equipment would result in blank spots, but would not otherwise alter the data to form an erroneous DNA profile. Our holding is thus consistent with Melendez-Diaz, as the Bode report is “nontestimonial” and the OCME criminalist testified that she was familiar with Bode’s procedures, protocols and accreditation.

We additionally find that the OCME witness’s testimony provided a sufficient foundation for introducing the Bode documents under our business records rule, CPLR 4518. In People v Cratsley (86 NY2d 81, 89 [1995]), we held that, under limited circumstances, a witness who is familiar with the practices of a company that produced the records at issue, and who generally relies upon such records, may have the requisite knowledge to meet the CPLR requirements for the admission of a business record, provided that the witness can also attest that (1) the record was made in the regular course of business; (2) it was the regular course of business to make such record; and (3) the record was made contemporaneously with the relevant event, thereby assuring its reliability.

Here, the forensic biologist testified that she relied on the documents at issue as a matter of practice; she reviewed them and used them in conducting her own DNA analysis. OCME entrusted Bode for a substantial amount of testing, including 225 rape kits. Further, the witness testified that she was familiar with the procedures and protocols used by Bode and that such procedures were up to standard. She finally testified as to the reliability of the testing procedures Bode used to generate this report, and as to Bode’s duty to create such records, that it was made contemporaneously, and that the record was made in the regular course of business.

Defendant’s final claim is that his right to effective assistance of counsel was violated when his attorney did not raise the statute of limitations claim again, after the victim provided a more ample description of her attacker during her trial testimony. Because there is no support for the notion that defendant would have been identified at an earlier date as a result of this additional information (had the police in fact known about it) and there was no evidence that police failed to act with “reasonable diligence” in investigating this crime (see CPL 30.10 [4] [a]), we conclude that defendant’s motion would have been meritless, and thus his counsel was not ineffective in failing to restate this claim.

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

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

Order affirmed.

      . In 1994, the New York State Legislature created a DNA data bank. An amendment of the statute provided for retroactive application. Thereafter, the New York City Police Department began a backlog project, and it submitted over 14,000 sexual assault kits to laboratories for DNA testing.

      . The exhibit contains 72 pages. The Bode documents are 29 pages and they contain graphs, charts, a description of the process used to test the DNA and a statement identifying whether the profile was of a male, female or was inconclusive.

      . It should be noted that the Appellate Division decision was entered in April 2008, well over a year before the Supreme Court of the United States decided Melendez-Diaz.


author: Graffeo, J.

text:
    [918 NE2d 936, 890 NYS2d 424]
    The People of the State of New York, Respondent, v Danny Colon, Appellant. The People of the State of New York, Respondent, v Anthony Ortiz, Appellant.
    Argued October 20, 2009;
    decided November 19, 2009

      POINTS OF COUNSEL

      Law Offices of Joel B. Rudin, New York City (Joel B. Rudin of counsel), and Legal Aid Society, Criminal Appeals Bureau (Harold V. Ferguson, Jr., and Steven Banks of counsel), for appellants.
    I. Appellants’ convictions should be vacated because the prosecutor knowingly misled the jury about the motive, bias, and interest of her principal witness; had the truth come out, there is a reasonable possibility that the outcome of this close case would have been affected. (Zappulla v New York, 391 F3d 462; United States v Bernal-Obeso, 989 F2d 331; Su v Filion, 335 F3d 119; United States v Agurs, 427 US 97; Napue v Illinois, 360 US 264; People v Steadman, 82 NY2d 1; People v Novoa, 70 NY2d 490; Jenkins v Artuz, 294 F3d 284; Mills v Scully, 826 F2d 1192; People v Perez, 127 AD2d 707.) II. Appellants’ convictions should be vacated under Brady v Maryland (373 US 83 [1963]) and People v Vilardi (76 NY2d 67 [1990]) because the People failed to disclose evidence contradicting their principal witness’s testimony denying that he had any reason to testify favorably for the People. (Giglio v United States, 405 US 150; People v Wright, 86 NY2d 591; People v Steadman, 82 NY2d 1; People v Bond, 95 NY2d 840; People v Baxley, 84 NY2d 208; Kyles v Whitley, 514 US 419; People v Simmons, 36 NY2d 126; Griffin v United States, 183 F2d 990; People v Behling, 26 NY2d 651; United States v Bagley, 473 US 667.) III. The convictions should be vacated because, under People v Vilardi (76 NY2d 67 [1990]), there is a reasonable possibility that defense counsel, at the time of trial, would have been able to use the investigative leads the People withheld to obtain admissible evidence that would have affected the outcome of the trial. (DiSimone v Phillips, 461 F3d 181; United States v Gil, 297 F3d 93; Bowen v Maynard, 799 F2d 593; People v Soto, 285 AD2d 618; People v Robinson, 133 AD2d 859; People v Hunter, 11 NY3d 1; People v Joseph, 86 NY2d 565; People v Wallace, 76 NY2d 953; Ellsworth v Warden, 333 F3d 1; People v Settles, 46 NY2d 154.)

      Robert M. Morgenthau, District Attorney, New York City {Patrick J. Hynes and Alan Gadlin of counsel), for respondent.
    Both defendants’ postjudgment motions were properly denied. (Brady v Maryland, 373 US 83; Giglio v United States, 405 US 150; People v Fuentes, 12 NY3d 259; People v Novoa, 70 NY2d 490; Strickler v Greene, 527 US 263; Shabazz v Artuz, 336 F3d 154; People v Tellier, 272 AD2d 347; Bell v Bell, 512 F3d 223; United States v Bagley, 473 US 667; People v Hunter, 11 NY3d 1.)

      Law Office of Marc Femich, New York City {Marc Fernich of counsel), Sercarz & Riopelle LLP {Maurice H. Sercarz of counsel), and Richard D. Willstatter, White Plains, for National Association of Criminal Defense Lawyers and another, amici curiae.
    I. The policies motivating Brady v Maryland (373 US 83 [1963]) and People v Vilardi (76 NY2d 67 [1990]) mandate broad disclosure of exculpatory information regardless of form. (People v Novoa, 70 NY2d 490; United States v Rodriguez, 496 F3d 221; Berger v United States, 295 US 78; United States v Gil, 297 F3d 93; Leka v Portuondo, 257 F3d 89; Grant v Alldredge, 498 F2d 376; United States v Polisi, 416 F2d 573; DiSimone v Phillips, 461 F3d 181; United States v Price, 566 F3d 900; United States v Triumph Capital Group, Inc., 544 F3d 149.) II. Appellants’ convictions must be reversed. {People v Primo, 96 NY2d 351; Holmes v South Carolina, 547 US 319; Kyles v Whitley, 514 US 419.)

      Weil, Gotshal & Manges LLP, New York City {Caitlin J. Halligan, Vernon S. Broderick, Eric S. Hochstadt and Cheri Veit of counsel), for Center on the Administration of Criminal Law at New York University School of Law, amicus curiae.
    I. Further guidance from this Court is warranted to clarify what conduct gives rise to a tacit agreement between a prosecutor and a cooperating witness for Brady disclosure purposes. (Brady v Maryland, 373 US 83; Giglio v United States, 405 US 150; People v Novoa, 70 NY2d 490; People v Cwikla, 46 NY2d 434; Douglas v Workman, 560 F3d 1156; Bell v Bell, 512 F3d 223; Wisehart v Davis, 408 F3d 321; Alderman v Zant, 22 F3d 1541; United States v Shaffer, 789 F2d 682; DuBose v Lefevre, 619 F2d 973.) II. This Court should adopt the Center on the Administration of Criminal Law’s proposed rule that a tacit agreement is formed and must be disclosed where, prior to a cooperating witness testifying, the witness has reason to believe that the prosecutor will or has assisted him in receiving a benefit and the prosecutor suggests she will or has done so or actually contacts an agency or third party from whom a benefit was or could be obtained. (People v Wright, 86 NY2d 591; People v Steadman, 82 NY2d 1; Brady v Maryland, 373 US 83; People v Vilardi, 76 NY2d 67; People v Savvides, 1 NY2d 554; People v Novoa, 70 NY2d 490; United States v Bagley, 473 US 667; Giglio v United States, 405 US 150; People v Santorelli, 95 NY2d 412; Bell v Bell, 512 F3d 223.) III. The case at bar confirms the need for a clear rule that broadly defines tacit agreements for Brady disclosure purposes. (People v Cwikla, 46 NY2d 434; People v Novoa, 70 NY2d 490.)
   OPINION OF THE COURT

Graffeo, J.

Shortly after midnight on December 8, 1989, the occupants of a van opened fire on two cars at a Manhattan intersection, killing two men and wounding two others. In the fall of 1990, defendants Danny Colon and Anthony Ortiz were arrested in connection with the shootings and charged with four counts each of second-degree murder, attempted second-degree murder and first-degree assault, as well as various weapons offenses.

At their joint trial in 1993, only two witnesses linked defendants to the crime. Aníbal Vera, a childhood friend and former associate of Colon in a drug-dealing operation, testified that he was with defendants the day after the shootings. According to Vera, Colon admitted that he was one of the shooters and that Ortiz also participated in the crime. During his testimony, Vera acknowledged that he did not implicate defendants until he was arrested in March 1990 on misdemeanor drug charges. As a result of his entering into a cooperation agreement with the District Attorney’s office, he agreed to testify against Colon and Ortiz. In return, he was permitted to enter a guilty plea to disorderly conduct and avoided jail time for what would have been a probation violation. Vera claimed that this favorable plea deal was the “only benefit” he received in exchange for his testimony and that the prosecutor did not “have anything to do with the disposition” of his subsequent 1992 felony drug charges, for which he received a sentence of 2 h to 5 years upon his guilty plea.

The second witness, Daniel Core, testified that he spoke with Colon and Ortiz while they were incarcerated together and each admitted his role in the December 1989 shootings. Core recalled Colon describing the shootings as a drug-related ambush and that Colon had identified Wilbur Hernandez, Willie Perez and “Moose” as the other occupants in the van. Core explained that at the time he reported this information to the authorities, he was facing life imprisonment for the March 1990 murders of the two survivors of the December 1989 attack, as well as federal drug conspiracy charges. He agreed to execute written cooperation agreements with state and federal prosecutors in the hope that, in exchange for his testimony against defendants, he would obtain substantially reduced sentences on his guilty pleas. Core also admitted at trial that he had been a drug dealer whose operations grossed up to $140,000 a day; that he was responsible for numerous murders in connection with his drug activities; and that he had previously lied to a grand jury in an unrelated case.

During summation, the prosecutor repeated Vera’s assertion that he had not received “any benefit” other than the favorable plea agreement resolving his 1990 misdemeanor drug case. The prosecutor also stressed that she had “nothing to do with the plea [Vera] ultimately took with a two and a half to five year sentence” in connection with his 1992 felony narcotics arrest.

The jury convicted defendants of two counts each of murder in the second degree, attempted murder in the second degree and assault in the first degree, and one count each of criminal use of a firearm in the first degree, criminal possession of a weapon in the second degree and criminal possession of a weapon in the third degree. Defendants were sentenced to two consecutive prison terms of 25 years to life for the murder convictions, which were to run concurrently with the lesser sentences imposed for the other convictions. Their judgments were affirmed on direct appeal (see 238 AD2d 213 [1st Dept 1997], Iv denied 90 NY2d 862 [1997], 90 NY2d 892 [1997]).

In 2003, Colon moved under CPL 440.10 to vacate the judgment, arguing that Vera had received additional benefits in exchange for his testimony and that the prosecutor had failed to correct Vera’s false testimony. Ortiz later joined in the motion and Supreme Court conducted a hearing at which the prosecutor testified but Vera did not appear.

At the hearing, defendants established that the District Attorney’s office had engaged in further activity on Vera’s behalf that neither Vera nor the prosecutor revealed during the trial. Specifically, the prosecutor had assisted in the relocation of Vera’s grandparents by contacting the New York City Housing Authority. Defendants also demonstrated that the prosecutor was involved with Vera’s 1992 felony drug case on two occasions. First, the prosecutor appeared at a calendar call to tell Vera about a plea offer of 2V2 to 5 years that had been authorized by the Office of the Special Narcotics Prosecutor. Second, approximately one month later, the prosecutor left a phone message with the narcotics prosecutor regarding Vera’s status as a witness in defendants’ murder trial. Defendants also revealed that the prosecutor was aware that a gun had been recovered from Vera’s hotel room prior to the murder trial and that Vera was never arrested or prosecuted for its possession.

Furthermore, the District Attorney’s office produced two handwritten notes by the trial prosecutor, dated March 28, 1990, that pertained to her interviews of two women who claimed to have information about the shootings. These notes had not been disclosed to defense counsel prior to trial. Based on the content of the interview notes, apparently one woman had identified four persons as participants in the shooting: Little Danny, Willie Perez, Moose and Wilbert. The second note contained a slightly different list of four names obtained from the second woman— Danny, Willie, Moose and Wilbur.

Following the hearing, Supreme Court denied defendants’ CPL 440.10 motions to vacate the judgments. The Appellate Division affirmed, finding that any error was harmless (55 AD3d 444 [1st Dept 2008]). A Judge of this Court granted leave to appeal (People v Colon, 12 NY3d 782 [2009]; People v Ortiz, 12 NY3d 786 [2009]), and we now reverse.

In their role as public officers, prosecutors “must deal fairly with the accused and be candid with the courts” (People v Steadman, 82 NY2d 1, 7 [1993]). This duty requires prosecutors not only to disclose exculpatory or impeaching evidence but also to correct the knowingly false or mistaken material testimony of a prosecution witness. Where a prosecutor elicits or fails to correct such inaccurate testimony, reversal and a new trial are necessary unless there is no “reasonable possibility” that the error contributed to the conviction (People v Pressley, 91 NY2d 825, 827 [1997]; see also Steadman, 82 NY2d at 8-9).

Here, Vera testified at trial that the only benefit he received for his testimony was his favorable 1990 plea deal. In fact, it was the prosecutor herself who elicited this testimony during Vera’s direct examination. But as the Appellate Division observed, the prosecutor’s assistance on behalf of Vera’s grandparents “constituted an additional benefit to the witness” (55 AD3d at 445), even though they did not ultimately move to a new apartment until two months after the trial. Vera also alleged, in effect, that the prosecutor had no involvement with his 1992 drug case. Yet, the prosecutor personally appeared in that case to convey the initial plea offer and later contacted the narcotics prosecutor regarding Vera’s status as a cooperating witness. Hence, the prosecutor failed to correct Vera’s misleading testimony and, in addition, compounded these errors by repeating and emphasizing the misinformation during summation.

Unlike the Appellate Division, we believe that there is a reasonable possibility that these errors affected the jury’s verdict (see People v Vilardi, 76 NY2d 67, 77 [1990]). At trial, only two witnesses connected defendants to the crime—Core and Vera. Core had previously committed perjury and was a self-described drug kingpin and murderer. His veracity was further called into question given that he was facing life imprisonment on both state and federal charges when he agreed to testify against defendants. Vera’s testimony was therefore crucial. But the false testimony elicited by the prosecutor regarding the benefits extended may well have impacted the jury’s perception of Vera’s credibility. By their very nature, benefits conferred on a witness by a prosecutor provide a basis for the jury to question the veracity of a witness on the theory that the witness may be biased in favor of the People. For this reason, it is important that witnesses provide truthful testimony when questioned about the receipt of such benefits, and the People must be vigilant to avoid misleading the court or jury. Rather than correct the inaccurate testimony, the prosecutor here exacerbated the problem during her closing comments. We also concur with the Appellate Division’s observation that the prosecutor should have turned over the two March 1990 interview notes. On this record, we conclude that a new trial is warranted.

Accordingly, in each case, the order of the Appellate Division should be reversed, defendant’s motion pursuant to CPL 440.10 granted, defendant’s judgment of conviction and sentence vacated and a new trial ordered.

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

In each case: Order reversed, etc.

      . Hernandez and Moose were murdered in 1992 and were therefore never brought to trial. Perez pleaded guilty to third-degree criminal possession of a weapon.

      . Vera later absconded and was rearrested in March 1993, after which he pleaded guilty to criminal possession of a controlled substance in the fifth degree and received a prison term of 2V2 to 5 years.

      . Before the murder trial, however, the prosecutor did turn over notes dated January 1990 arising from an interview of another woman who likewise implicated “Little Danny”—a nickname that evidently belonged to someone other than Danny Colon. Defendants were therefore aware of the alleged “Little Danny” lead before trial.

      . Although Supreme Court, following the CPL 440.10 hearing, ultimately found that neither the police nor the prosecutor intended to benefit Vera by not arresting or prosecuting him in connection with the gun found in his hotel room before the murder trial, we are of the view that, this information should have been timely disclosed to the defense.


author: Pigott, J.

text:
    [920 NE2d 344, 892 NYS2d 288]
    The People of the State of New York, Respondent, v Collier Gillyard, Appellant.
    Argued October 21, 2009;
    decided November 23, 2009

      POINTS OF COUNSEL

      Shearman & Sterling, LLP, New York City {Steven F. Molo, Christine A. Meiers, Robert L. Whitener, Michael S. Carucci and Mary Runkle of counsel), and Office of the Appellate Defender {Richard M. Greenberg and Rosemary Herbert of counsel) for appellant.
    I. The trial court erred in admitting evidence of appellant’s uncharged criminal act to show his “familiarity and access” to the tools of the charged crime. (People v Molineux, 168 NY 264; Coleman v People, 55 NY 81; Spencer v Texas, 385 US 554; People v Rojas, 97 NY2d 32; People v Resek, 3 NY3d 385; People v Roe, 74 NY2d 20; People v Crandall, 67 NY2d 111; People v Zackowitz, 254 NY 192; People v McKinney, 24 NY2d 180; People v Del Vermo, 192 NY 470.) II. The trial court erred by allowing the prosecutor to argue in summation evidence not in the record, which undermined appellant’s theory of the case. (Williams v Brooklyn El. R.R. Co., 126 NY 96; People v Ashwal, 39 NY2d 105; People v Jones, 44 NY2d 76; People v Francis, 58 AD3d 1015; People v Collins, 12 AD3d 33; People v World, 157 AD2d 567; People v Walters, 251 AD2d 433; People v Torres, 223 AD2d 741.) III. The trial court committed reversible error. (People v Crimmins, 36 NY2d 230; People v Alexander, 94 NY2d 382; People v Ostrow, 12 Misc 3d 69; People v Robinson, 260 AD2d 508; Spencer v Texas, 385 US 554; People v Vega, 3 AD3d 239; People v McKinney, 24 NY2d 180; People v Zackowitz, 254 NY 192.)

      Robert M. Morgenthau, District Attorney, New York City (Britta Gilmore and David M. Cohn of counsel), for respondent.
    I. The court properly exercised its discretion by admitting into evidence a handcuff key recovered from defendant. (People v Scarola, 71 NY2d 769; People v Alvino, 71 NY2d 233; People v Carroll, 95 NY2d 375; People v Aska, 91 NY2d 979; People v Molineux, 168 NY 264; People v Rojas, 97 NY2d 32; People v Till, 87 NY2d 835; People v Tosca, 98 NY2d 660; People v Hudy, 73 NY2d 40; People v Fiore, 34 NY2d 81.) II. The prosecutor’s challenged summation comment did not deny defendant a fair trial. (People v Galloway, 54 NY2d 396; People v Ashwal, 39 NY2d 105; People v Marks, 6 NY2d 67, 362 US 912; Darden v Wainwright, 477 US 168; People v Massie, 2 NY3d 179; People v Melendez, 55 NY2d 445; People v Tankleff, 84 NY2d 992; People v De Jesus, 42 NY2d 519; People v Davis, 58 NY2d 1102; People v Rodriguez, 100 NY2d 30.)
   OPINION OF THE COURT

Pigott, J.

This case concerns two incidents in which defendant impersonated a police officer. During the first incident, defendant displayed a badge, claimed to be a police officer and demanded that the victim pay him money. When the victim resisted, he pushed the victim against the wall, brandished a pair of handcuffs and threatened to use them. As a result, the victim, accompanied by defendant, withdrew money from an ATM and gave it to defendant.

The second incident occurred about a month later when defendant was driving and pulled alongside a moving taxicab. He displayed a badge and motioned to the cab driver to pull over. When the cab driver complied, defendant and an accomplice approached the cab and acted as if they were conducting a traffic stop. Wearing a badge around his neck, defendant demanded the cab driver’s ID, claiming the cab driver was intoxicated and had hit his vehicle. Two police officers on routine patrol came upon the scene and, finding it suspicious, pulled over. After talking to the cab driver, the officers approached defendant and his accomplice, and asked whether they were carrying badges. When the accomplice leaned forward to reach beneath his seat, the officers removed them from the car. Inside the car, the police recovered two fake badges and a pair of toy handcuffs. Defendant was arrested and charged with robbery in the second degree (Penal Law § 160.10 [1]), grand larceny in the fourth degree (Penal Law § 155.30 [6]) and criminal impersonation in the first and second degrees (Penal Law § 190.26 [1]; § 190.25 [3]), arising out of the two incidents.

Prior to trial, the court granted the People’s Molineux application to allow testimony regarding defendant’s possession of a handcuff key on January 23, 2006—several weeks after the incidents, to show his identity and to prove the fact that he had access to handcuffs. The key was discovered by a corrections officer in a search of defendant at the time he was incarcerated at Biker’s Island while awaiting trial on this case. Possession of such a key by a prisoner is a violation of Department of Correction rules, and of Penal Law § 205.20 (1).

In opposition to the People’s motion, defense counsel had argued that the evidence was of no relevance to the case and that it was simply being offered to prejudice the jury. The prosecutor argued that it was relevant as it showed defendant “has access to handcuffs” and went to defendant’s identity. However, defense counsel was willing to stipulate to identity. At trial, over defense counsel’s objections, the court allowed testimony that defendant was found in possession of the handcuff key while at the detention center.

Defendant was convicted of robbery in the second degree (Penal Law § 160.10 [1]), grand larceny in the fourth degree (Penal Law § 155.30 [6]) and criminal impersonation in the first and second degrees (Penal Law § 190.26 [1]; § 190.25 [3]).

Thereafter, defendant made a motion to set aside the verdict arguing that he was deprived of a fair trial by the court’s admission of the handcuff key evidence. He also claimed that a statement made by the prosecutor during summation was improper as that evidence was not allowed in by the court during trial. Supreme Court denied the motion finding, among other things, that the evidence showed that defendant had “access” to the type of weapon or tool alleged to have been used, and that it was admissible to establish the defendant’s involvement in the charged crime. In the court’s view, the evidence that defendant was familiar with, and had access to, handcuffs corroborated the victims’ accounts.

The Appellate Division affirmed holding that the evidence of the handcuff key was properly admitted into evidence to demonstrate defendant’s access to and familiarity with handcuffs, which were involved in both crimes (55 AD3d 310 [2008]). In the Appellate Division’s view, the lapse of time of the discovery of the key was not so great as to render this evidence excessively remote. Moreover, the court held that its probative value exceeded its prejudicial effect, which was minimized by the court’s instructions. The court also considered defendant’s arguments concerning the prosecutor’s summation and summarily rejected them.

In this Court, defendant argues that Supreme Court erred in admitting evidence of the handcuff key to show “familiarity and access” to the tools of the charged crime. He argues that “familiarity and access” should not be recognized as an exception to the Molineux rule.

Long ago, in People v Molineux (168 NY 264 [1901]), this Court held that there are instances when evidence of uncharged crimes may be used to prove guilt of the offense charged. We articulated that such evidence may be admitted in circumstances

“when [the evidence] tends to establish (1) motive; (2) intent; (3) the absence of mistake or accident; (4) a common scheme or plan embracing the commission of two or more crimes so related to each other that proof of one tends to establish the others; [or] (5) the identity of the person charged with the commission of the crime on trial” (id. at 293).

Acknowledging that this list was not exhaustive, we established the rule that evidence of defendant’s other crimes is admissible only if probative of some fact at issue other than the defendant’s criminal propensity (see People v Rojas, 97 NY2d 32, 37-40 [2001]). The rule reflects the importance of an accused being judged only on relevant, probative evidence, rather than on the basis of propensity to commit crime (see id. at 36-37). The balancing of probative value against potential prejudice is entrusted to the trial court’s discretion (People v Ventimiglia, 52 NY2d 350, 359-360 [1981]).

We agree with defendant that his familiarity with using handcuff keys has little relevance to the case. During the first incident, although defendant threatened the complainant that he was going to handcuff him, he never used the handcuffs on him. Although the evidence could arguably be relevant to show that he was convincing as a police officer, the complainant, in the first incident, testified that he knew that defendant wasn’t a police officer and that he was being “scammed.” During the second incident, involving the cab driver, handcuffs were not even involved; the police merely discovered them under the seat of the car during a search. Therefore, the evidence’s “limited probative value when compared to its potential for prejudice and the unacceptable danger that the jury might condemn defendant because of his past criminal behavior and associations and not because he is guilty of the offense charged” makes this evidence inadmissible (People v Richardson, 137 AD2d 105, 107-108 [3d Dept 1988]).

Despite the fact that the key was admitted in error in this case, we find the error harmless. An error may be found harmless where “the proof of defendant’s guilt, without reference to the error, is overwhelming” and where there is no “significant probability . . . that the jury would have acquitted the defendant had it not been for the error” (People v Crimmins, 36 NY2d 230, 241-242 [1975]). Regarding the first incident, the People presented the complainant’s uncontested account of the robbery and his identification of defendant as the perpetrator. That testimony was corroborated by a surveillance video from the ATM vestibule that depicted defendant waiting while the victim withdrew cash.

As it pertains to the second incident, the victim offered a firsthand account of defendant’s impersonation of a police officer, including his display of a fake badge and his demand that the driver pull over. The arresting police officer, who observed the fake police stop, testified as to how defendant and his accomplice positioned themselves and their vehicle as if they were police officers. These testimonial accounts were corroborated by the discovery of the fake handcuffs and badges in defendant’s vehicle. Thus, proof of defendant’s guilt relative to both incidents was overwhelming and there is no significant probability that the verdict would have been different if the court excluded the evidence of the handcuff key.

We further find that, although the prosecutor’s statement during summation was improper, this single good faith error was not so prejudicial as to require a mistrial (see Crimmins, 36 NY2d at 237). The court issued a curative instruction, reminding the jury that the prosecutor’s argument was merely her recollection of the testimony.

The order of the Appellate Division should be affirmed.

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

Order affirmed.