author: Graffeo, J. Ciparick, J. (dissenting in part).

text:
    [ 886 NE2d 144, 856 NYS2d 522]
    Appleton Acquisition, LLC, et al., Appellants, v National Housing Partnership et al., Respondents.
    Argued February 12, 2008;
    decided March 18, 2008

      POINTS OF COUNSEL

      Herrick, Feinstein LLP, New York City (Milton Mollen, John R. Goldman and Grant R. Cornehls of counsel), for appellants.
    I. Appellants have the common-law right to seek rescission of the merger. (Theodore Trust U/A Dated Dec. 30, 1971 v Smadbeck, 277 AD2d 67; Breed v Barton, 54 NY2d 82; Matter of Willcox v Stern, 18 NY2d 195; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185; Eisenberg v Central Zone Prop. Corp., 306 NY 58; Alpert v 28 Williams St. Corp., 63 NY2d 557; Orinoco Realty Co. v Bandler, 233 NY 24; Matter of Cole, 235 NY 48; Hechter v New York Life Ins. Co., 46 NY2d 34; Batas v Prudential Ins. Co. of Am., 281 AD2d 260.) II. The Appellate Division’s dismissal of the entire complaint was error.

      Alston & Bird LLP, New York City (John F. Cambria and Craig H. Kuglar of counsel), for respondents.
    I. The Appellate Division properly held that section 121-1102 (d) of the Partnership Law required dismissal of the complaint. (People v Zinke, 76 NY2d 8; Ruzicka v Rager, 305 NY 191; Lanier v Bowdoin,
      282 NY 32; Majewski v Broadalbin-Perth Cent. School Dist., 91 NY2d 577; Matter of OnBank & Trust Co., 90 NY2d 725; Breed v Barton, 54 NY2d 82; City of New York v State of New York, 86 NY2d 286; Connecticut Nat. Bank v Germain, 503 US 249; Conroy v Aniskoff, 507 US 511; Tompkins v Hunter, 149 NY 117.) II. Section 489 of the Judiciary Law also mandates dismissal of the complaint. (Koro Co., Inc. v Bristol-Myers Co., 568 F Supp 280; Elliott Assoc., L.P. v Banco de la Nacion, 194 F3d 363; Banque de Gestion Privee-Sib v La Republica de Paraguay, 787 F Supp 53.)
   OPINION OF THE COURT

Graffeo, J.

When a limited partnership merges with another entity, Partnership Law § 121-1102 grants limited partners the right to receive the fair market value of their partnership interests. The primary issue in this case is whether the statute allows a challenge by a limited partner to be brought in an action for rescission or money damages on the grounds that the transaction was premised on fraudulent or illegal acts by the general partner. We hold that a limited partner who objects to a merger on these grounds must raise them in an appraisal proceeding under the Partnership Law.

I

Beautiful Village Associates Redevelopment Company is a limited partnership created in 1978 for the purpose of acquiring and managing residential real estate. The sole general partner was defendant National Housing Partnership (NHP). NHP sold 33 units of limited partnership interest in Beautiful Village to 26 individuals (plaintiffs Limited Partners). Each limited partnership unit cost approximately $78,000.

Once the formation of Beautiful Village was complete, it purchased an apartment complex in Manhattan. Beautiful Village enrolled the building in the federal Department of Housing and Urban Development’s (HUD) Section 8 low-income, affordable housing program and, as a result, received federal financing. By structuring the transaction in this manner, Beautiful Village was able to provide tax benefits to its limited partners.

The rents charged to tenants were governed by a schedule approved by HUD, which subsidized the difference between the rental rate specified in the contract and what a tenant could afford to pay. The contract between Beautiful Village and HUD was set to expire in 2000, at which time Beautiful Village could renew the contract or opt out of the Section 8 program. In June 2000, Beautiful Village renewed its contract with the federal government and the apartment complex continued to provide Section 8 housing.

Early the next year, Beautiful Village obtained an unsecured line of credit from defendant AIMCO Properties, LI] which owned NHP and was a subsidiary of defendant Apartment Investment and Management Company (AIMCO). Unable to meet its payments, by the summer of 2002 Beautiful Village owed AIMCO Properties over $1.5 million.

Rather than foreclosing on the apartment complex, NHP and its parent companies in August 2002 proposed that Beautiful Village be merged with a new limited partnership owned by AIMCO Properties. Each of the Limited Partners was offered $100 or 2.5 common units of AIMCO Properties (each unit being worth about $42) for their partnership shares. A proxy statement was sent to the Limited Partners that disclosed the conflict of interest between NHP and AIMCO Properties, and informed the Limited Partners that rejection of the merger would most likely cause AIMCO Properties to foreclose on the property, resulting in significant, adverse tax consequences for the Limited Partners. The proxy included copies of relevant New York statutes relating to the partnership agreement and proposed merger, including the right to institute a judicial appraisal proceeding to determine the fair market value of the limited partnership interests. None of the Limited Partners chose to exercise that right. In September 2002, the merger was approved and the Limited Partners’ interests in Beautiful Village were extinguished.

In 2005, plaintiff Appleton Acquisitions, LLC—a firm not previously involved in the Beautiful Village transactions— contacted the former Limited Partners and expressed its interest in purchasing their equitable or partnership shares, together with any legal claims they had against AIMCO Properties, the partnership and the partnership’s agents. Appleton offered a nonrefundable deposit of $2,000 and, if it ultimately chose to buy the shares, each Limited Partner would receive an additional $18,000. All of the Limited Partners accepted Appleton’s offer.

Appleton then initiated this action against NHI^ AIMCO Properties and AIMCO. The first three causes of action sought rescission of the Beautiful Village merger and ancillary money damages on the grounds of fraud, breach of fiduciary duty and negligent misrepresentation. In connection with these three causes of action, Appleton claimed that defendants’ proxy statement included intentionally false or misleading statements for the purpose of inducing the Limited Partners to sell their interests. Appleton further alleged that NHP failed to properly manage the affairs of the partnership and caused the value of the limited partnership shares to be inadequate because it neglected to participate in the federal Mark-Up-To-Market program when the contract with HUD was renewed in 2000. These allegations were also used to support the fourth and fifth causes of action, which sought monetary damages for breach of contract and aiding a breach of fiduciary duty.

Defendants moved to dismiss the complaint, in part claiming that a limited partner’s exclusive remedy for challenging the validity of a merger was through a statutory appraisal proceeding under Partnership Law § 121-1102. Supreme Court denied the motion. The Appellate Division reversed, concluding that because the Limited Partners did not challenge the merger in an appraisal proceeding, Partnership Law § 121-1102 (d) barred any action by limited partners seeking to attack the validity of the merger, including those premised on allegations of fraud or illegality. We granted leave to appeal and now affirm.

II

When a limited partnership merges with another entity, a limited partner who objects to the merger is “entitled to receive in cash . . . the fair value of his interest in the limited partnership” (Partnership Law § 121-1102 [c]). If the value of the limited partner’s interest cannot be agreed upon, the limited partner is entitled to initiate a special appraisal proceeding under Partnership Law § 121-1105 (b). Aside from the ability to request a judicial appraisal, Partnership Law § 121-1102 (d) specifies that a limited partner

“shall not have any right at law or in equity under this article to attack the validity of the merger . . . , or to have the merger . . . set aside or rescinded, except in an action ... [to contest] compliance with the provisions of the partnership agreement or [the notice provisions of section 121-1102 (a)].”

This language reveals a directive by the Legislature to make an appraisal proceeding the “sole remedy of a limited partner to attack the validity of a merger” (Rich, Practice Commentaries, McKinney’s Cons Laws of NY, Book 38, Partnership Law art 8-A, 2008 Pocket Part, at 61).

Faced with this declaration of legislative intent, plaintiffs ask us to engraft a common-law exception onto Partnership Law § 121-1102 (d) for situations where a merger is alleged to be permeated with fraud or illegality. Plaintiffs note that the common law allowed shareholders of corporations to initiate a civil action based on these grounds and they urge that equity dictates that we recognize a similar cause of action for rescission by a limited partner.

In the common law, it has long been established that a corporate shareholder could challenge a merger on the grounds that it was induced by fraudulent or illegal activities (see e.g. Breed v Barton, 54 NY2d 82, 87 [1981]; Eisenberg v Central Zone Prop. Corp., 306 NY 58, 68-69 [1953]; Kavanaugh v Kavanaugh Knitting Co., 226 NY 185, 196 [1919]). When the Legislature enacted the Business Corporation Law, it decreed that a shareholder who dissented from a corporate merger transaction could initiate an appraisal proceeding to determine the fair market value of the shareholder’s interest in the corporation (see Business Corporation Law § 623 [h] [2]). Significantly, the Legislature also codified the common-law exception for corporate mergers premised on fraud or illegality and expressly recognized that a dissenting shareholder may “bring or maintain an appropriate action to obtain relief on the ground that [the merger] will be or is unlawful or fraudulent as to him” (Business Corporation Law § 623 [k] [emphasis added]; see Breed v Barton, 54 NY2d at 87; Alpert v 28 Williams St. Corp., 63 NY2d 557, 567-568 [1984]).

In our view, a comparison of the text of Business Corporation Law § 623 (k) and Partnership Law § 121-1102 (d) is fatal to plaintiffs’ argument. Both statutes share a common feature: the availability of an appraisal proceeding to determine the value of the interest held by a dissenting shareholder or limited partner. Yet the critical distinction is that section 623 (k) explicitly incorporates a common-law fraud or illegality exception to the exclusivity of the appraisal remedy, whereas Partnership Law § 121-1102 (d) does not. The Assembly sponsor explained that the Partnership Law was amended to promote the twin objectives of granting limited partners “appraisal rights similar to those shareholders [are given] under the Business Corporation Law” while also giving “greater assurance to the general partners as to the validity” and, thus, finality of a merger or consolidation (July 17, 1990 Letter from Assembly Sponsor, Bill Jacket, L 1990, ch 950, at 8). In light of the fact that section 623 (k) of the Business Corporation Law had been enacted many years earlier, the absence of the fraud or illegality exception in section 121-1102 (d) can be viewed only as an intentional legislative omission. Consequently, in the absence of a violation of the partnership agreement or inadequate notice of the proposed merger (see Partnership Law § 121-1102 [d]), the statute prohibits limited partners from relying on any form of relief other than a judicial appraisal—an approach that furthers the Legislature’s interest in finality of mergers. We therefore conclude that the first three causes of action were properly-dismissed.

We nevertheless recognize that fraud or illegality perpetrated by a general partner against limited partners is a serious concern requiring redress. The Legislature has designed the Partnership Law so that the statutory appraisal proceeding is the appropriate means of challenging fraudulent or illegal conduct by a general partner. The appraisal procedures for limited partnerships are incorporated from Business Corporation Law § 623 (see Partnership Law § 121-1105 [b]). The purpose of an appraisal proceeding is to assist the court in determining “the fair value [of a limited partner’s interest] as of the close of business on the day prior to the [merger’s] authorization date” (Business Corporation Law § 623 [h] [4]). In calculating that figure, a court is to consider “the nature of the transaction giving rise to the [limited partner’s] right to receive payment . . . and all other relevant factors” {id. [emphasis added]). This broad language allows a dissenting limited partner to raise the issue of fraud, illegality, breach of fiduciary responsibility or other deceitful acts by the general partner that may have resulted in less compensation than the limited partner should have received (see generally Fleming v International Pizza Supply Corp., 676 NE2d 1051, 1057-1058 [Ind 1997]; Steinberg v Amplica, Inc., 42 Cal 3d 1198, 1209, 729 P2d 683, 690 [1986]). Ultimately, we are left with a legislative recognition that limited partners are entitled to be compensated for the fair value of their interests in a partnership—and general partners may be held accountable for their fraudulent, deceptive or illegal acts— via an appraisal proceeding, not a civil action that seeks to set aside or otherwise attack a merger.

Ill

Appleton and the Limited Partners alternatively maintain, and our dissenting colleagues accept, that the fourth and fifth causes of action seeking money damages should not have been dismissed under section 121-1102 (d) because they were premised on allegations of pre-merger breach of fiduciary and contractual duties stemming from the mismanagement of Beautiful Village. The statutory exception to the exclusivity of the appraisal proceeding is limited to civil actions that challenge a merger on the grounds that it was not effectuated in compliance with the terms of the partnership agreement or the notice requirements of section 121-1102 (a) (see Partnership Law § 121-1102 [d]). The dissent suggests that limited partners can avail themselves of this exception by simply alleging that a general partner breached its obligations under the partnership agreement by engaging in fraudulent conduct in connection with a merger. We do not think the Legislature intended such a result for two reasons.

First, general partners always have fiduciary responsibilities to limited partners (see e.g. Lichtyger v Franchard Corp., 18 NY2d 528, 536-537 [1966]) and any fraud by a general partner necessarily constitutes a violation of that duty. Plaintiffs would allow limited partners to circumvent the appraisal process merely by pleading that the general partner had been involved in fraudulent activities and that such conduct violated the partnership agreement. In our view, this would effectively nullify the Legislature’s intent to impose restrictions on actions “at law or in equity ... to attack the validity of the merger ... or to have the merger or consolidation set aside or rescinded” (Partnership Law § 121-1102 [d]).

Second, and relatedly, the dissent incorporates the common-law fraud or illegality exception from Business Corporation Law § 623 (k) into Partnership Law § 121-1102 (d) by permitting fraud or illegality to be pleaded as a breach of the partnership agreement. Yet the dissent acknowledges that the plain language of section 121-1102 (d) does not codify the common-law corporate exception and instead prohibits allegations of this type—which are the basis of the first three causes of action— from being asserted in a cause of action for rescission of a merger. Under this view, the application of section 121-1102 (d) turns on the type of relief sought, a concept without support in light of the broad statutory language that prohibits “any” legal or equitable challenges to the validity of a merger, including actions for money damages. We conclude that the exception to section 121-1102 (d) pertains only to civil actions that seek to rescind or attack the validity of a merger on the grounds that there was a violation of the procedures specified in a partnership agreement for effectuating a merger or that there was a failure to comply with the notice requirements of subdivision (a) of the statute.

Close scrutiny of the allegations in the fourth and fifth causes of action discloses that plaintiffs focus on challenging the terms of the merger, the ultimate value of the Limited Partners’ interests and the amount of compensation the Limited Partners received when the merger was approved—issues the Legislature has decreed must be addressed in an appraisal proceeding. Indeed, only one allegation in the complaint is arguably unrelated to the merger itself—defendants’ failure to participate in the Mark-Up-To-Market program when the HUD contract was renewed in 2000. Significantly, however, this claim is used by plaintiffs to support their theory that they suffered a financial loss because defendants misrepresented “the valuation of the Limited Partners’ interests in the Partnership[ ]” and “fail[ed] to advise the Limited Partners that the offering price for Units of Partnership in the Merger was inadequate and unfair.” Hence, the Limited Partners allege that they were induced to accept an unfair price for their interests.

Acceptance of the Limited Partners’ argument would allow them to bypass the appraisal process even though they are asserting that the compensation they received for their shares was inadequate. Although the fourth and fifth causes of action do not directly ask to rescind the merger, it is readily apparent that the claims are nevertheless veiled attacks on the validity of the merger—the propriety of the statements purportedly made by defendants and the adequacy of the compensation offered for approval of the merger—that section 121-1102 (d) prohibits from being raised outside the context of an appraisal proceeding. The fourth and fifth causes of action were therefore properly dismissed.

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

Ciparick, J. (dissenting in part).

I agree with the majority that plaintiffs’ first three causes of action were properly dismissed. Because, however, Partnership Law § 121-1102 (d) only prohibits a limited partner from attacking the validity or seeking to set aside or rescind a merger or consolidation, and specifically exempts “an action or contest with respect to compliance with the provisions of the partnership agreement,” I believe a common-law action for damages under a theory of breach of contract and aiding and abetting such breach would lie. I, therefore, disagree and respectfully dissent as to the dismissal of plaintiffs’ fourth and fifth causes of action, as they do not directly attack the merger as such.

It is well established that statutory interpretation begins with the plain language of the statute. “As the clearest indicator of legislative intent is the statutory text, the starting point in any case of interpretation must always be the language itself, giving effect to the plain meaning thereof" (Majewski v BroadalbinPerth Cent. School Dist., 91 NY2d 577, 583 [1998]). We have always preferred a literal reading and look to the unambiguous language of the statute for guidance as to what the Legislature intended. Partnership Law § 121-1102 (d) provides that:

“[a] limited partner of a constituent limited partnership who has a right under this article to demand payment for his partnership interest shall not have any right at law or in equity under this article to attack the validity of the merger or consolidation, or to have the merger or consolidation set aside or rescinded, except in an action or contest with respect to compliance with the provisions of the partnership agreement or [the notice provisions of] subdivision (a) of this section.”

Nowhere does the text of the statute expressly prohibit the availability of the common-law right of a limited partner to seek damages as a result of a breach of contract premised on a general partner’s alleged violation of a partnership agreement and the aiding and abetting of such breach by others. Neither does there exist a clear and specific legislative intent to abrogate the common-law remedy of breach of contract (see Tzolis v Wolff, 10 NY3d 100, 102 [2008]; Hechter v New York Life Ins. Co., 46 NY2d 34, 38-39 [1978]). In fact, there exists no legislative history that supports defendants’ and the majority’s view that the Legislature purposefully intended to make appraisal rights the exclusive remedy for aggrieved limited partners. The statute is very specific that a limited partner has no right to attack the validity of a merger and is relegated to exercising dissenter’s appraisal rights, but it does not preclude a common-law action for failure to comply with provisions of the partnership agreement—a breach of contract claim.

I respectfully disagree with the majority that, by allowing the breach of contract actions to proceed, the limited partners will be allowed to “bypass the appraisal process” (majority op at 259) and that the claims are “veiled attacks on the validity of the merger” (majority op at 259). The complaint is simply an allegation asserting that National Housing Partnership (NHP) breached its contractual duty under the partnership agreement and that as a result of the alleged breach the limited partners suffered damages. Such a theory of liability does not “attack the validity of the merger or consolidation” or seek “to have the merger or consolidation set aside or rescinded,” nor does it incorporate the common-law fraud or illegality exception from Business Corporation Law § 623 (k) as suggested by the majority (majority op at 258). The Legislature surely did not intend section 121-1102 to insulate a general partner from an action for damages resulting from a breach of contract merely because the merger or consolidation was successfully completed.

It is well settled that a court, when deciding whether to grant a motion to dismiss pursuant to CPLR 3211, must take the allegations asserted within a plaintiffs complaint as true, and accord plaintiff the benefit of every possible inference, determining only whether the facts as alleged fit within any cognizable legal theory. Here, plaintiffs assert that NHP not only breached its fiduciary duty owed to the limited partners under the partnership agreement, but also specifically breached the partnership agreement prior to the merger by its chronic mismanagement of the property. Plaintiffs also assert that NHP’s failure to take advantage of readily available federal subsidies both decreased the value of the partnership itself and caused a financial loss to the partnership from the loss of additional rental income. Plaintiffs further assert that the AIMCO defendants aided and abetted these breaches by allowing its general partner to engage in transactions not reasonably competitive with those that could have been obtained from unaffiliated persons. Therefore, plaintiffs’ fourth cause of action seeking recovery for damages, including loss of income, incurred as a result of NHP’s alleged breach of contract and of its fiduciary duties under the partnership agreement is cognizable as is the fifth cause of action brought against the AIMCO defendants for allegedly aiding and abetting the breach, as both causes of action fall within the exception of section 121-1102.

Recently, in Tzolis v Wolff (10 NY3d 100 [2008]), we held that a limited liability company (LLC) member had the right to assert a derivative cause of action on behalf of the LLC under common law, despite the fact that the legislative history could not conclusively establish why the Legislature omitted text from the LLC statute that would specifically authorize LLC members to bring a derivative suit.

We held in Tzolis “that members of a limited liability company (LLC) may bring derivative suits on the LLC’s behalf, even though there are no provisions governing such suits in the Limited Liability Company Law” (Tzolis at 102). Here, we have a statute prohibiting a limited partner, who had the right under Partnership Law § 121-1102 (d) to demand payment for its partnership interest, from seeking redress. This is so because if the limited partner fails to exercise appraisal rights, it loses its right to either attack the validity of or rescind the merger or consolidation. Nowhere does Partnership Law § 121-1102 (d) likewise prohibit a plaintiff from asserting a claim for damages under a breach of contract theory.

“To hold that there is no remedy when corporate fiduciaries use corporate assets to enrich themselves was unacceptable in 1742 and in 1832, and it is still unacceptable today” (Tzolis at 105). The rule proposed by the defendants and adopted by the majority allows a merger transaction, in the limited partnership context, to become in effect a general release for a contractual claim for damages by a limited partner against a general partner, regardless of whether the damages arose pre- or post-merger. It relegates the aggrieved limited partner to asserting its rights by way of an appraisal proceeding, a remedy that is not always adequate and certainly would not be adequate here.

Therefore, I would modify the order of the Appellate Division to reinstate plaintiffs’ fourth and fifth causes of action.

Judges Read, Smith and Pigott concur with Judge Graffeo; Judge Cipabick dissents in part and votes to reinstate the fourth and fifth causes of action in a separate opinion in which Chief Judge Kaye and Judge Jones concur.

Order affirmed, with costs.

      . Although not relevant to this appeal, some classes of limited partners were not given this choice and had to accept the cash offer.

      . A prior federal action that Appleton filed against NHP was voluntarily withdrawn before commencement of the state case.

      . The Mark-Up-To-Market program was created in June 1999 as an emergency initiative promulgated by HUD. Its purpose was to preserve affordable housing in certain residential real estate markets where rent subsidies resulted in below market rental values and, thus, it was financially attractive for owners to opt-out of the Section 8 program and convert the properties to private, market-rate operations (see Report of US Dept of Hous & Urban Dev accompanying Notice H 99-15, at 2; US Dept of Hous & Urban Dev, Off of Multifamily Hous, Section 8 Renewal Policy, Guidance for the Renewal of Project-Based Section 8 Contracts § 3-1 [A]). For properties that met specific criteria, the Mark-Up-To-Market program provided additional subsidies that raised the total rent collected by the owner to prevailing market rates while ensuring that the properties continued to provide Section 8 affordable housing for at least five years. Congress made the program permanent in late 1999 (see Pub L 106-74, tit V, § 531, 113 US Stat 1109 [106th Cong, 1st Sess, Oct. 20, 1999], amending Multifamily Assisted Housing Reform and Affordability Act of 1997 § 524 [42 USC § 1437f Note]). With respect to the case before us, we will presume that Beautiful Village would have been eligible to participate in the Mark-Up-To-Market program when it extended its contract with HUD in 2000.

      . The procedures utilized in these proceedings are delineated in Business Corporation Law § 623 (h)-(k) (see Partnership Law § 121-1105 [b]).

      . This conclusion is buttressed by our recent decision in Tzolis v Wolff (10 NY3d 100 [2008]). In that case, we held that members of a limited liability company may bring derivative suits on the LLC’s behalf because they are not prohibited from doing so by the relevant statutory provisions, which are silent on the matter. Here, in contrast, section 121-1102 (d) expressly restricts dissenting limited partners from using an action for rescission or money damages to dispute the validity of a merger on grounds unrelated to the terms of the partnership agreement or the statutorily required notice.

      . The statute also requires a court to consider the “effects on the [partnership] and its [partners], [and] the concepts and methods then customary in the relevant securities and financial markets for determining fair value of [interests in a partnership] engaging in a similar transaction under comparable circumstances” (Business Corporation Law § 623 [h] [4]). Notably, pretrial disclosure may be sought by the parties and authorized by the court, including “disclosure of any expert’s reports relating to the fair value of the shares whether or not intended for use at the trial . . . and notwithstanding subdivision (d) of [CPLR] 3101” (id.). Given the scope of subdivision (h) (4), it is conceivable that the Limited Partners could have utilized an expert appraiser to establish that the failure to participate in the Mark-Up-To-Market program negatively affected the valuation of their shares in Beautiful Village.

      . In light of our determination, defendants’ alternative basis for an affirmance (which was not addressed by the Appellate Division) is academic.

       Indeed, Chief Justice John Marshall wrote,
      “[i]f, on tracing the right to contract, and the obligations created by contract, to their source, we find them to exist anterior to, and independent of society, we may reasonably conclude that those original and pre-existing principles are, like many other natural rights, brought with man into society; and, although they may be controlled, are not given by human legislation” {Ogden v Saunders, 12 Wheat [25 US] 213, 345 [1827]).


source: Caselaw Access Project

author: Smith, J.

license: Public Domain

text:
    [ 885 NE2d 881, 856 NYS2d 28]
    In the Matter of 9th & 10th Street L.L.C., Appellant, v Board of Standards and Appeals of the City of New York, Appellant.
    Argued February 13, 2008;
    decided March 25, 2008

      POINTS OF COUNSEL

      Michael A. Cardozo, Corporation Counsel, New York City (Stephen J. McGrath, Virginia Waters and Cheryl Payer of counsel), for appellant.
    The Appellate Division erred in reversing Supreme Court, because the Board of Standards and Appeals’ determination sustaining the Department of Buildings is rational and should be upheld. (Matter of New York Botanical Garden v Board of Stds. & Appeals of City of N.Y., 91 NY2d 413; People ex rel. Fordham Manor Refm. Church v Walsh, 244 NY 280; Matter of SoHo Alliance v New York City Bd. of Stds. & Appeals, 264 AD2d 59, 95 NY2d 437; Human Dev. Servs. of Port Chester v Zoning Bd. of Appeals of Vil. of Port Chester, 110 AD2d 135, 67 NY2d 702; Matter of Fuhst v Foley, 45 NY2d 441; Matter of Newman v Zoning Bd. of Appeals of Town of Yorktown, 121 AD2d 543, 68 NY2d 610; Matter of Marasco v Luney, 99 AD2d 492, 63 NY2d 605; Matter of Paisley Dev. Corp. v Zoning Bd. of Appeals of Town of Milton, 58 AD2d 705; Matter of Cowan v Kern, 41 NY2d 591; Conley v Town of Brookhaven Zoning Bd. of Appeals, 40 NY2d 309.)

      Anderson Kill & Olick, P.C., New York City (Steven Cooper, Jeffrey E. Glen and Gail M. Eckstein of counsel), for respondent.
    I. This Court’s standard of review is whether the Board of Standards and Appeals’ denial of the building permit was arbitrary or capricious or contrary to law. (Matter of City of New York v New York City Civ. Serv. Commn., 6 NY3d 855; Matter of Wilson v City of White Plains, 95 NY2d 783.) II. 9th & 10th Street L.L.C. is entitled as a matter of right to construct the dormitory that is the subject of the application. (Matter of Film-ways Communications of Syracuse v Douglas, 106 AD2d 185, 65 NY2d 878; Matter of Committee To Save Washington Sq. v Dormitory Auth. of State of N.Y., 281 AD2d 770; Matter of New York Botanical Garden v Board of Stds. & Appeals of City of N.Y., 91 NY2d 413; Matter of Parkway Vil. Equities Corp. v Board of Stds. & Appeals of City of N.Y., 279 AD2d 299; Matter of Baskin v Zoning Bd. of Appeals of Town of Ramapo, 40 NY2d 942; Matter of Di Milia v Bennett, 149 AD2d 592; Matter of Association of Friends of Sagaponack v Zoning Bd. of Appeals of Town of Southampton, 287 AD2d 620; Matter of Kelly v Zoning Bd. of Appeals of Town of Harrison, 224 AD2d 424; Matter of Kam Hampton I Realty Corp. v Board of Zoning Appeals of Vil. of E. Hampton, 273 AD2d 385; People v Gulf Oil Corp., 92 Misc 2d 107.) III. The Department of Buildings did not apply “standard Department of Buildings practice” in requiring proof of an institutional nexus as part of the permitting process. (Matter of Rudin Mgt. Co. v Commissioner of Dept. of Consumer Affairs of City of N.Y., 213 AD2d 185.) IV The Department of Buildings and the Board of Standards and Appeals have no authority to require proof of the institutional nexus at the prepermitting stage as a condition of building the “as-of-right” dormitory. (Appelbaum v Deutsch, 66 NY2d 975; Matter of Ford v Zoning Bd. of Appeals of City of Long Beach, 7 AD3d 797.) V Denying an “as-of-right” permit based on community and political opposition is illegal. (Matter of Fox v City of Buffalo Zoning Bd. of Appeals, 60 AD2d 991.)

      Katie Kendall, New York City, Vicki Been and Michael Gruen for Municipal Art Society of New York, Inc., amicus curiae.
    I. The order of the Appellate Division, First Department, subverts the intent of the community facilities provisions of the New York City Zoning Resolution by allowing an applicant to build the additional bulk permitted for community facilities without any demonstration that the building will in fact be used as a community facility. (Matter of Reed v Board of Stds. & Appeals of City of N.Y., 255 NY 126.) II. Substantiating the use before construction is critical in implementing the New York City Zoning Resolution; the order of the Appellate Division, if upheld, would cripple the ability of a municipality to interpret and enforce its zoning regulations. (Asian Ams. for Equality v Koch, 72 NY2d 121; Berenson v Town of New Castle, 38 NY2d 102; Stringfellow’s of N.Y. v City of New York, 91 NY2d 382; Schad v Mount Ephraim, 452 US 61; Penn Central Transp. Co. v New York City, 438 US 104; New Orleans v Dukes, 427 US 297; Young v American Mini Theatres, Inc., 427 US 50; Village of Belle Terre v Boraas, 416 US 1; Berman v Parker, 348 US 26; Welch v Swasey, 214 US 91.)

      The Plunkett & Jaffe Group of McKenna Long & Aldridge LLP, New York City (William F. Plunkett Jr., Charles E. Dorkey III and Timothy J. Plunkett of counsel), for Defenders of the Historic Upper East Side and others, amici curiae.
    I. The actions of the Department of Buildings were neither arbitrary nor capricious. II. To the extent Matter of Di Milia v Bennett (149 AD2d 592 [1989]) and Matter of Baskin v Zoning Bd. of Appeals of Town of Ramapo (40 NY2d 942 [1976]) have any relevance to these facts, they should not be followed, but rather confined to their facts.

      Stroock & Stroock & Lavan LLP, New York City (Ross F. Moskowitz and Claude G. Szyfer of counsel), for Real Estate Board of New York, Inc., amicus curiae.
    I. The Department of Buildings cannot deny “as of right” permits. (Matter of Di Milia v Bennett, 149 AD2d 592; Matter of Baskin v Zoning Bd. of Appeals of Town of Ramapo, 40 NY2d 942.) II. The City of New York has adequate legal and practical power to enforce the use restrictions of buildings. III. Substantial research into the economic viability of the dormitory project has been undertaken.
   OPINION OF THE COURT

Smith, J.

Petitioner sought a building permit to construct a dormitory. The New York City Department of Buildings denied the permit on the ground that petitioner had not shown it could actually use the building as a dormitory, and that if it did not do so the result would be either an illegal use or a vacant building. We hold that the Department’s action was not arbitrary and capricious. Where there is reason to doubt that a proposed structure can be used for a lawful purpose, municipal authorities are not required to let the property owner build the building and see what happens.

Facts and Procedural History

Petitioner acquired from New York City a lot on East 9th Street in Manhattan, occupied by a former school building. The deed under which petitioner took title restricts development of the property to “a ‘Community Facility Use’ as such use is defined in the New York City Zoning Resolution.” That Zoning Resolution lists several permitted uses; the one relevant here is “[c]ollege or school student dormitories” (Zoning Resolution § 22-13).

After several years, petitioner submitted to the New York City Department of Buildings an application to build a 19 story dormitory on the property—a dormitory that, as proposed by petitioner, would be configured much like an ordinary apartment building. A dormitory was allowed by the applicable zoning, as well as by the deed. However, if the proposed structure turned out to be an ordinary apartment building, it would violate both the deed and the zoning laws. Apartment buildings were lawful in the zoning district where the property was located, but such buildings were treated less favorably than dormitories and other “community facilities”; an apartment building on petitioner’s site would have been limited to 10 stories.

The Department took the position, which petitioner does not now contest, that a “[cjollege or school student dormitor[yj” within the meaning of the Zoning Resolution is not just a building in which the apartments are rented to students. Under the Department’s interpretation, a building qualifies as a dormitory only if it is operated by, or on behalf of, at least one college or school. Thus, the Department asked petitioner to “substantiate” the proposed dormitory use by showing an “institutional nexus”—a connection with an educational institution sufficient to persuade the Department that the building, when built, really would be a dormitory.

Petitioner tried unsuccessfully to satisfy the Department’s request for proof of a “nexus” with a college or school. Petitioner committed itself to lease the property for at least 10 years to University House Corp. (UHC)—an entity created, apparently by petitioner’s lawyers, around the time of the application for the building permit. Petitioner promised the Department that UHC’s board of directors would consist solely of people appointed by “participating educational institutions” and that the building would be operated as a dormitory for college or school students. It did not, however, identify any educational institution that had committed itself to use the building as a dormitory for its students, or had even expressed an interest in doing so.

The Department refused to approve petitioner’s application for a building permit, and the Board of Standards and Appeals (BSA) denied petitioner’s appeal from that refusal. Petitioner brought this CPLR article 78 proceeding to annul the BSA’s determination. Supreme Court denied relief and dismissed the proceeding, but the Appellate Division reversed, with two Justices dissenting. The Appellate Division relied on Matter of Di Milia v Bennett (149 AD2d 592 [2d Dept 1989]) and Matter of Baskin v Zoning Bd. of Appeals of Town of Ramapo (40 NY2d 942 [1976], revg, on dissenting mem of Shapiro, J., 48 AD2d 667 [2d Dept 1975]), which it read as holding that a building permit could not be denied on the basis of “a possible future illegal use” (43 AD3d 36, 41 [2007] [emphasis omitted]). In the view of the Appellate Division majority, the Department’s refusal to issue a building permit to petitioner was “an impermissible administrative anticipatory punishment” {id. at 37). If the building was not ultimately used as a dormitory, the Appellate Division held, the City’s remedy was “either denial or revocation of the certificate of occupancy” or an action to enforce the restriction in the deed {id. at 42).

The BSA appealed to us as of right pursuant to CPLR 5601 (a), and we now reverse.

Discussion

Petitioner relies, as did the Appellate Division majority, on Di Milia and Baskin for the proposition that a building permit cannot be withheld because of concern that the proposed building will be used illegally. Petitioner reads Di Milia and Baskin too broadly. Both cases hold that the mere possibility of a future illegal use is not an adequate reason for withholding a building permit. But where, as here, officials reasonably fear that the legal use proposed for a building will prove impracticable, it is not improper to insist on a showing that the applicant can actually do what it says it will do.

In both Di Milia and Baskin, municipal authorities denied permits to construct one-family dwellings, because they feared that the houses might be converted to illegal two-family dwellings. Nothing in either opinion, however, suggests that one-family use was unlikely or impractical. On the contrary, Justice Shapiro’s dissent in Baskin, which we adopted, says that “the residence will concededly be occupied by . . . one family” (48 AD2d at 668-669). At least in Baskin, the municipality’s concern was that, because of the design of the home, it might, after being occupied by one family for some time, easily be occupied, illegally, by two. From the terse opinion in Di Milia, it appears that the concern there was similar. In each case, the court held that this possibility of “future illegal use” (Di Milia, 149 AD2d at 593) was not a valid reason for withholding a building permit.

Di Milia and Baskin would be applicable here if it were clear that petitioner’s proposed building would be used initially as a dormitory. If that were the case, the mere possibility that it could later be converted to illegal apartment use would not justify withholding a building permit. But here, the Department of Buildings doubted that dormitory use would ever be possible, and asked for assurances—in the form of a connection with an educational institution—that it would be.

To seek such assurances seems no more than prudent. It would create needless problems if petitioner built a 19 story building, only to find that it could not use it in a legally-permitted way. The City would then face a choice between waiving the legal restrictions and requiring the building to remain vacant or be torn down. The City’s officials did not act arbitrarily or capriciously in trying to avoid that dilemma.

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

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

Order reversed, etc.

       During the course of its discussions with petitioner, the Department promulgated a new regulation (1 RCNY 51-01) governing applications for permits to build dormitories. The requirements this regulation imposes are similar to those the Department imposed on petitioner here, but both sides agree that the regulation does not apply to this case.


author: Pigott, J.

text:
    [ 885 NE2d 884, 856 NYS2d 31]
    Monroe Yale Mann, Respondent, v Bernard Abel et al., Appellants, et al., Defendants.
    Argued and submitted February 5, 2008;
    decided March 25, 2008

      POINTS OF COUNSEL

      Henry R. Kaufman, P.C., New York City (Henry R. Kaufman, Michael K. Cantwell and Beth A. Willensky of counsel), for appellants.
    I. The Appellate Division erred in overlooking, or in rejecting without explanation, appellants’ appeal from denial of their cross motion for summary judgment. (Winegrad v New York Univ. Med. Ctr., 64 NY2d 851; Matter of Aho, 39 NY2d 241; Immuno AG. v Moor-Jankowski, 77 NY2d 235, 500 US 954; Karaduman v Newsday, Inc., 51 NY2d 531; Gross v New York Times Co., 82 NY2d 146; Armstrong v Simon & Schuster, 85 NY2d 373; 600 W. 115th St. Corp. v Von Gutfeld, 80 NY2d 130; Millus v Newsday, Inc., 89 NY2d 840; Steinhilber v Alphonse, 68 NY2d 283; Brian v Richardson, 87 NY2d 46.) II. The judgment should be reversed because it was impermissibly based on constitutionally-protected statements of opinion. (Immuno AG. v Moor-Jankowski, 77 NY2d 235; Gross v New York Times Co., 82 NY2d 146; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369; Brian v Richardson, 87 NY2d 46; Millus v Newsday, Inc., 89 NY2d 840, 520 US 1144; 600 W. 115th St. Corp. v Von Gutfeld, 80 NY2d 130; Steinhilber v Alphonse, 68 NY2d 283; Letter Carriers v Austin, 418 US 264; Greenbelt Cooperative Publishing Assn., Inc. v Bresler, 398 US 6). III. The judgment should also be reversed because respondent failed to prove, by clear and convincing evidence, that appellants published any substantially false and defamatory statement of fact with actual malice. (Prozeralik v Capital Cities Communications, 82 NY2d 466; Bose Corp. v Consumers Union of United States, Inc., 466 US 485; Lolik v Big V Supermarkets, 86 NY2d 744; Grieco v Galasso, 297 AD2d 659; Iannaccone v 21st Century Open MRI, P.C., 8 AD3d 233; Cohen v Hallmark Cards, 45 NY2d 493; New York Times Co. v Sullivan, 376 US 254; Masson v New Yorker Magazine, Inc., 501 US 496; Fleckenstein v Friedman, 266 NY 19; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369.)

      Mann & Mann, LLP, Port Chester (Monroe Yale Mann of counsel), respondent pro se.
    I. Defendants failed in the lower court to move to set aside the verdict and failed to preserve their challenge. (Smetanick v Erie Ins. Group, 16 AD3d 957.) II. A libel action cannot be maintained unless it is premised on published assertions of fact; falsity is the sine qua non of a libel claim; defendants proved neither opinion privilege nor truth of published assertions against plaintiff. (Kamalian v Reader’s Digest Assn., Inc., 29 AD3d 527; Gjonlekaj v Sot, 308 AD2d 471; Brian v Richardson, 87 NY2d 46; Gross v New York Times Co., 82 NY2d 146.) III. The jury reached its verdict on a fair interpretation of the evidence; whether a statement is defamatory is first a matter for the court, and the courts below have already made their decisions. Defendants issued the article with malice. (Medco Plumbing, Inc. v Sparrow Constr. Corp., 22 AD3d 647; Corcoran v People’s Ambulette Serv., 237 AD2d 402; Cholewinski v Wisnicki, 21 AD3d 791; Salazar v Fisher, 147 AD2d 470; Curry v Roman, 217 AD2d 314, 88 NY2d 804; Brooklyn Law School v Aetna Cas. & Sur. Co., 661 F Supp 445, 849 F2d 788; Trump v Chicago Tribune Co., 616 F Supp 1434; Held v Pokorny, 583 F Supp 1038; Reeves v American Broadcasting Cos., Inc., 580 F Supp 84, 719 F2d 602; Grass v News Group Publs., Inc., 570 F Supp 178.) IV Defendants have not alleged a single affirmative defense in their answer, a requirement under New York law, nor has any privilege been asserted in their answer, also a requirement, and in any event, these were questions for the court and not the jury. Malice existed both in fact and law. (Follendorf v Brei, 51 Misc 2d 363; Cheatum v Wehle, 5 NY2d 585; Rinaldi v Village Voice, 79 Mise 2d 57; Schulman v Anderson Russell Kill & Olick, 117 Misc 2d 162; Mercedes-Benz of N. Am. v Finberg, 58 AD2d 808; Bounds v Mutual of Omaha Ins. Co., 37 AD2d 1008; Schaffer Stores Co. v Grand Union Co., 84 AD2d 614, 56 NY2d 570, 644; Crane v New York World Tel. Corp., 308 NY 470; Matter of Burmester v De Lucia, 263 NY 315.) V The existence of compensatory damages is presumed. (Gatz v Otis Ford, 274 AD2d 449; Liberman v Gelstein, 80 NY2d 429.) VI. Defendants’ claim that actual malice was not shown is untrue, as the record clearly demonstrates, and in any event it was a question of fact. (Brian v Richardson, 87 NY2d 46; Gross v New York Times Co., 82 NY2d 146.) VII. The appellate court clearly reviewed all the evidence and made its decision, stating that plaintiff was defamed and entitled to compensatory damages; this decision was reached on a fair interpretation of the evidence. (Gross v New York Times Co., 82 NY2d 146; Bounds v Mutual of Omaha, 37 AD2d 1008.)

      Levine Sullivan Koch & Schulz, LLP, New York City (David A. Schulz of counsel), for Advance Publications, Inc. and others, amici curiae.
    I. The courts below impermissibly permitted a jury to impose damages for the expression of political opinions. (Bose Corp. v Consumers Union of United States, Inc., 466 US 485; Garrison v Louisiana, 379 US 64; Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369; Steinhilber v Alphonse, 68 NY2d 283; Milkovich v Lorain Journal Co., 497 US 1; Immuno AG. v Moor-Jankowski, 77 NY2d 235; Brian v Richardson, 87 NY2d 46; Millus v Newsday, Inc., 89 NY2d 840; James v Gannett Co., 40 NY2d 415; Balderman v American Broadcasting Cos., 292 AD2d 67.) II. The courts below failed to make an independent determination of the sufficiency of the evidence of actual malice. (Bose Corp. v Consumers Union of United States, Inc., 466 US 485; Pennekamp v Florida, 328 US 331; Greenbelt Cooperative Publishing Assn., Inc. v Bresler, 398 US 6; Prozeralik v Capital Cities Communications, 82 NY2d 466; Freeman v Johnston, 84 NY2d 52; Balderman v American Broadcasting Cos., 292 AD2d 67; Immuno AG. v Moor-Jankowski, 77 NY2d 235; Harte-Hanks Communications, Inc. v Connaughton, 491 US 657; Contemporary Mission, Inc. v New York Times Co., 842 F2d 612; Anderson v Liberty Lobby, Inc., 477 US 242.)
   OPINION OF THE COURT

Pigott, J.

This action for libel arises out of an article published on August 22, 2003 in the Westmore News, an independent newspaper serving the Town of Rye. The newspaper’s founder, defendant Bernard Abel, wrote the article as part of his regularly featured column called “The Town Crier.” The column is located on the opinion page of the newspaper and is identified by an editor’s note that it represents the opinion of the author and “not necessarily that of this newspaper.”

The article at issue, entitled “Borrelli on par with Marie Antoinette” (referring to Rye Town Councilman Mike Borrelli), was written by Abel during a heated local election for control of the Rye Town Board. Under a subheading, entitled “Who is the real Mann?” Abel wrote about plaintiff Monroe Yale Mann, the Rye Town Attorney. Abel described Mann as a “political hatchet Mann” and “one of the biggest powers behind the throne” in the Town of Rye government. Abel wrote that it appeared that “Mann pulls the strings” and questioned whether Mann was “leading the Town of Rye to destruction.” The article identified Mann as playing an “instrumental” role in a decision by the Port Chester School Board, some 35 years earlier, to discontinue its practice of allowing high school students from the Blind Brook School District to attend Port Chester High School.

Following publication, Mann commenced this action against defendants Abel and Westmore News, Inc., alleging that the statements contained in the article were false and published with actual malice. Before engaging in discovery, defendants moved to dismiss the complaint, contending that the action was filed in bad faith to chill the exercise of protected free speech and that the suit was frivolous. Supreme Court denied the motion and the Appellate Division affirmed without addressing defendants’ constitutional claim. Thereafter, Mann moved for summary judgment on the complaint. Defendants opposed the motion and cross-moved for summary judgment asserting that the article contained only expressions of opinion by Abel. Supreme Court denied both motions on the ground that there were disputed issues of fact, and did not address whether the article constituted protected opinion. The parties were directed to proceed to trial.

At the conclusion of the trial, the jury found that the statements in the article were defamatory and that defendant West-more News had published the statements either with the knowledge that they were false or in reckless disregard of their truth or falsity. The jury awarded Mann $75,000 in compensatory damages against Westmore News and punitive damages against both Westmore News and Abel in the amount of $15,000 each. Defendants appealed, arguing that the statements were constitutionally protected opinion. The Appellate Division upheld the jury’s determination that Mann was defamed, and concluded that he was entitled to compensatory damages, albeit at a reduced amount. The court dismissed the punitive damages awards and ordered a new trial unless Mann stipulated to a reduction in the compensatory damages award, which he did, leaving in place only the reduced award against Westmore News. Defendants then appealed as of right on the basis of a substantial constitutional question. We now reverse on the ground that the alleged defamatory statements constitute nonactionable statements of opinion as a matter of law.

Whether a particular statement constitutes an opinion or an objective fact is a question of law (see Rinaldi v Holt, Rinehart & Winston, 42 NY2d 369, 381 [1977], cert denied 434 US 969 [1977]). Expressions of opinion, as opposed to assertions of fact, are deemed privileged and, no matter how offensive, cannot be the subject of an action for defamation (see Weiner v Doubleday & Co., 74 NY2d 586, 593 [1989], cert denied 495 US 930 [1990], citing Steinhilber v Alphonse, 68 NY2d 283 [1986]). Distinguishing between opinion and fact has “proved a difficult task,” but this Court, in furtherance of that endeavor, has set out the following factors to be considered:

“(1) whether the specific language in issue has a precise meaning which is readily understood; (2) whether the statements are capable of being proven true or false; and (3) whether either the full context of the communication in which the statement appears or the broader social context and surrounding circumstances are such as to signal . . . readers or listeners that what is being read or heard is likely to be opinion, not fact” (Brian v Richardson, 87 NY2d 46, 51 [1995], quoting Gross v New York Times Co., 82 NY2d 146, 153 [1993], quoting Steinhilber, 68 NY2d at 292 [internal quotation marks omitted]).

In Immuno AG. v Moor-Jankowski (77 NY2d 235 [1991]), we declined to adopt an analysis that would require courts first to search the article for particular factual statements and then to hold such statements actionable unless couched in figurative or hyperbolic language (id. at 254). Rather, we held that “courts must consider the content of the communication as a whole, as well as its tone and apparent purpose” and in particular “should look to the over-all context in which the assertions were made and determine on that basis ‘whether the reasonable reader would have believed that the challenged statements were conveying facts about the libel plaintiff ” (Brian, 87 NY2d at 51, quoting Immuno, 77 NY2d at 254).

Applying that test to the facts of this case, we hold that, when viewed within the context of the article as a whole, a reasonable reader would conclude that the statements at issue were opinion. Although not dispositive, we note that the column was on the “opinion” page of the newspaper and accompanied by an editor’s note that the article was an expression of opinion by the author. Moreover, the tenor of the column, including allegations that Mann was a “political hatchet Mann” who appeared to “pull[ ] the strings,” clearly signals the reader that the piece is likely to be opinion, not fact. Likewise, the statement that Abel thought Mann’s actions were “leading the Town of Rye to destruction” could not be anything but a statement of opinion. Although one could sift through the article and argue that false factual assertions were made by the author, viewing the content of the article as a whole, as we must, we conclude that the article constituted an expression of protected opinion and therefore, summary judgment should have been awarded to defendants (see Millus v Newsday, Inc., 89 NY2d 840 [1996]).

Accordingly, the order of the Appellate Division insofar as appealed should be reversed with costs, and the complaint dismissed in its entirety.

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

Order, insofar as appealed from, reversed, etc.


author: Ciparick, J.

text:
    [ 886 NE2d 764, 857 NYS2d 3]
    In the Matter of Virginia Henneberry, Appellant, v ING Capital Advisors, LLC, et al., Respondents.
    Argued February 6, 2008;
    decided March 18, 2008

      POINTS OF COUNSEL

      Mintz & Gold LLP, New York City (Steven G. Mintz and Lisabeth Harrison of counsel), for appellant.
    I. The arbitration award violated appellant’s fundamental constitutional right to due process of law, since the arbitrator’s repeated rulings falsely led her to believe that respondents had the burden of proof on the central disputed issue and thereby materially affected the entire presentation of appellant’s case. (Matter of Beckman v Greentree Sec., 87 NY2d 566; Matter of Goldfinger v Lisker, 68 NY2d 225; Matter of Hirsch v Hirsch, 4 AD3d 451; Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917; P & P Indus., Inc. v Sutter Corp., 179 F3d 861; Bowles Fin. Group, Inc. v Stifel, Nicolaus & Co., Inc., 22 F3d 1010; Bell Aerospace Co. Div. of Textron, Inc. v Local 516, Intl. Union, United Auto., Aerospace & Agric. Implement Workers of Am. [UAW], 500 F2d 921; Ficek v Southern Pac. Co., 338 F2d 655, 380 US 988; Matter of McMahan & Co. [Dunn New-Fund I], 230 AD2d 1, 90 NY2d 806; Employers Ins. of Wausau v National Union Fire Ins. Co., 933 F2d 1481.) II. The arbitrator exceeded his authority and impermissibly rewrote the parties’ agreement when he determined that respondents had the right to terminate appellant for “unsatisfactory performance” without obtaining the approval of the contractually-designated oversight committee. (Sweeney v Herman Mgt., 85 AD2d 34; Matter of National Cash Register Co. [Wilson], 8 NY2d 377; Matter of Board of Educ. of N. Babylon Union Free School Dist. v North Babylon Teachers’ Org., 104 AD2d 594.)

      Kramer Levin Naftalis & Frankel LLP, New York City (Robert N. Holtzman and Kerri Ann Law of counsel), for respondents.
    I. This Court lacks jurisdiction over this appeal. (Mount St. Mary’s Hosp. of Niagara Falls v Catherwood, 26 NY2d 493; Matter of Motor Veh. Acc. Indem. Corp. v Aetna Cas. & Sur. Co., 89 NY2d 214; New York Cent. Mut. Fire Ins. Co. v Nichols, 192 AD2d 1131; Guilford v City of Buffalo, 177 AD2d 971; Antinore v State of New York, 49 AD2d 6; Matter of Goldfinger v Lisker, 68 NY2d 225; Matter of Hirsch v Hirsch, 4 AD3d 451; Matter of Unigard Mut. Ins. Co. v Hartford Ins. Group, 108 AD2d 917; Matter of Beckman v Greentree Sec., 87 NY2d 566; P & P Indus., Inc. v Sutter Corp., 179 F3d 861.) II. The grounds for vacating an arbitration award are extremely limited. (Matter of Goldfinger v Lisker, 68 NY2d 225; Matter of McMahan & Co. [Dunn New-Fund I], 230 AD2d 1; Matter of Kohnberg v Murdock, 5 NY2d 859; Matter of Sprinzen [Nomberg], 46 NY2d 623; Matter of Peckerman v D & D Assoc., 165 AD2d 289; Matter of Brown & Williamson Tobacco Corp. v Chesley, 7 AD3d 368; Integrated Sales v Maxell Corp. of Am., 94 AD2d 221; In re Griffin Indus., Inc. [Petrojam, Ltd.], 58 F Supp 2d 212.) III. There is no basis to vacate the arbitration award. (People v Blue, 178 AD2d 539; Matter of Kingsley v Redevco Corp., 61 NY2d 714; Bowles Fin. Group, Inc. v Stifel, Nicolaus & Co., Inc., 22 F3d 1010; Teamsters Local 312 v Matlack, Inc., 118 F3d 985; Gulf Coast Indus. Workers Union v Exxon Co., USA, 70 F3d 847; Iran Aircraft Indus. v Avco Corp., 980 F2d 141; Harvey Aluminum [Inc.] v United Steelworkers of Am., AFL-CIO, 263 F Supp 488; Matter of Walker v General Motors Corp., Pontiac Motor Div., 159 Misc 2d 651; Hortis v Madison Golf Club, 92 AD2d 713; Santosky v Kramer, 455 US 745.)
   OPINION OF THE COURT

Ciparick, J.

In November 2001, petitioner Virginia Henneberry entered into an employment agreement with respondent ING Furman Selz Asset Management, LLC, the parent company of corespondent ING Capital Advisors, LLC. The agreement provided that petitioner was to be employed as a managing principal of ING Capital Advisors from January 1, 2001 through December 31, 2005.

Paragraph 11 of the agreement listed four circumstances that could lead to petitioner’s termination, two of which are relevant here. Under paragraph 11 (b), petitioner could be terminated by a unanimous vote of the three other managing principals of ING Capital Advisors, subject to approval by the parent company’s operating committee, for “unsatisfactory performanee” or “professional misconduct.” In that event, she would be paid her annual salary plus certain bonuses. Pursuant to paragraph 11 (d) of the agreement, petitioner could be terminated without cause; however, she would be entitled to a much larger severance.

In July 2002, the firm’s other managing principals unanimously agreed that petitioner’s employment should be terminated because of certain performance deficiencies. Final approval of the termination decision fell to Paul Gyra, as the operating committee was no longer in existence at this time. After conducting his own investigation into petitioner’s employment performance, Mr. Gyra approved petitioner’s termination.

In August 2002, petitioner was notified that she had been terminated under paragraph 11 (b) of the agreement. In response, petitioner served respondents with a demand for arbitration pursuant to the agreement’s arbitration clause. That clause provided that disputes would be resolved by a sole arbitrator acting pursuant to procedural rules promulgated by the American Arbitration Association (AAA).

The AAA appointed an arbitrator who, at the prehearing stage, indicated that respondents bore the burden of proof—by a fair preponderance of the evidence—to establish that they terminated petitioner in good faith for unsatisfactory performance. Respondents disagreed with the arbitrator’s conclusion, and after they raised that objection, the arbitrator determined that the burden of proof issue should be held in abeyance and that respondents could later renew their objection during the arbitration. Thereafter, respondents reminded the arbitrator, both by letter and during a teleconference, that he left the issue of burden of proof open. Respondents repeatedly argued that the burden of proof should be on petitioner. They did so in their prehearing memorandum, opening statement, motion for judgment as a matter of law, closing statement and posthearing memorandum. Petitioner made no submission, however, regarding which party bore the burden of proof.

The arbitrator conducted 13 days of hearings in May, June and October of 2004. He heard testimony from 12 witnesses, including petitioner, and received 188 exhibits into evidence, 99 of which were proffered by petitioner. After the hearing concluded, the arbitrator asked for and received briefs that addressed both the evidence and the law. He then issued a decision, stating that:

“I had ruled that [Respondent had the burden of proof by a fair preponderance of the evidence on [petitioner’s] termination for unsatisfactory performance under paragraph 11 (b) of the Agreement. I am now reversing that ruling and now rule that the burden of proof regarding the propriety of [petitioner’s] termination for unsatisfactory performance under [p]aragraph 11 (b) is on the [petitioner] by a fair preponderance of the evidence. . . .
“I also find that had [Respondent, rather than [petitioner], had the burden of proof, as I had first ruled, it would have satisfied its burden by a fair preponderance of the evidence.”

Having thus allocated the burden of proof, the arbitrator concluded that petitioner was properly terminated under paragraph 11 (b) of the agreement.

Petitioner then commenced this proceeding to vacate the arbitrator’s award. Supreme Court denied petitioner’s application to vacate and granted respondents’ cross petition to confirm, stating that:

“petitioner acknowledges that she had the opportunity to present additional witnesses, but she ‘opted to [forgo] these witnesses due to strategic, timing, and cost-related considerations, reasoned with the goal of presenting the strongest case, in which [respondents] held the burden’ . . . Hindsight is not an acceptable ground for [vacating the award based on] arbitrator misconduct” (2005 NY Slip Op 30267DJ], *5).

The Appellate Division affirmed, finding that:

“the arbitrator [did not] deprive petitioner of a fair hearing when he reversed his ruling on burden of proof, as petitioner was on notice throughout the proceeding that respondents continuously objected to the original ruling, and the arbitrator had indicated that his decision was subject to change. Not only was petitioner unable to specify any non-redundant evidence she would have presented, but the arbitrator specifically held that respondents would have prevailed regardless of who bore the burden of proof ’ (37 AD3d 353, 353-354 [2007]).

Petitioner appealed, and we now affirm.

The parties here voluntarily agreed to arbitrate disputes arising under the employment agreement and, as such, our review of an arbitration award rendered pursuant to that private agreement is governed exclusively by CPLR 7511. An arbitration award may be vacated where there has been “corruption, fraud or misconduct in procuring the award,” the arbitrator “exceeded his [or her] power” or where there was a “failure to follow the procedure of this article” (CPLR 7511 [b] [1] [i], [iii], [iv]). Petitioner contends that CPLR 7511 (b) (1) (i), which authorizes review of arbitral awards for “misconduct,” and CPLR 7511 (b) (1) (iv), which authorizes vacatur for failure to follow the statute’s procedural requirements, should be read together as authorizing judicial review of arbitration awards where the procedures employed deprived a party of basic due process or fundamental fairness. Petitioner claims that she was deprived of a fair hearing because of the arbitrator’s reversal of his decision to place the burden of proof on respondents after evidence had already been presented. This decision, she says, denied her the opportunity to be heard. The record does not support her claim.

Petitioner was on notice from the inception of the arbitration that respondents objected to the arbitrator’s initial allocation of the burden of proof. After stating their objection, respondents availed themselves of every opportunity to explain to the arbitrator that the burden should be properly placed on petitioner. At no time did the arbitrator preclude respondents from proffering such arguments.

Petitioner maintains that vacatur should be permitted in fairness because she made certain strategic choices, acting in reliance upon the arbitrator’s allocation of the burden of proof. She claims that had she known that she would bear the burden of proof, she would have called additional witnesses who would have attested to her reputation among her peers and in the financial industry. The main issue, however, was whether, in terminating petitioner, respondents acted in good faith. The arbitrator expressly concluded that they did, stating “that the foregoing process was engaged in and performed in good faith,” and he stated that respondents would have prevailed no matter who bore the burden of proof. His conclusion is reflected in three pages of careful analysis of petitioner’s claims. The arbitrator’s shifting of the burden of proof after he took evidence did not deny petitioner a fundamentally fair arbitration.

The situation here is unlike others in which we have determined that an arbitration award should be vacated because of arbitrator misconduct (see e.g. Matter of Goldfinger v Lisker, 68 NY2d 225 [1986] [arbitrator engaged in ex parte communications with a party]). Here, at worst, the arbitrator engaged in a procedural error, which he ultimately corrected. He did not infect the underlying proceeding with the taint of fraud.

Petitioner also contends that the award should be vacated pursuant to CPLR 7511 (b) (1) (iii) because the arbitrator exceeded his authority by concluding that the approval of petitioner’s termination by the operating committee, as expressly required under the agreement, was unnecessary. Specifically, petitioner argues that the arbitrator’s decision was irrational and the effective equivalent of redrafting the parties’ agreement.

“An arbitrator is charged with the interpretation and application of [an] agreement” (Matter of New York City Tr. Auth. v Transport Workers’ Union of Am., Local 100, AFL-CIO, 6 NY3d 332, 336 [2005] [citation omitted]). In interpreting an agreement, “an excess of power occurs only where the arbitrator’s award violates a strong public policy, is irrational or clearly exceeds a specifically enumerated limitation on the arbitrator’s power” (id.). Most importantly, “courts are obligated to give deference to the decision of the arbitrator” (id. [citation omitted]).

Here, the arbitrator’s decision was neither irrational nor did it exceed a specifically enumerated limitation on his power. The operating committee was dissolved before petitioner was terminated and its function was assumed by Mr. Gyra, who, after conducting an independent investigation, approved the termination. Petitioner’s construction of the agreement, in the absence of the operating committee, would allow her to be fired only under paragraph 11 (d). The arbitrator did not act irrationally in rejecting that interpretation, which would mean that the dissolution of the operating committee caused paragraph 11 (b) to become superfluous.

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

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

Order affirmed, with costs.

      . At the time of petitioner’s termination, the severance differential between an 11 (b) termination and 11 (d) termination was approximately $2.1 million.

      . In February 2002, due to a corporate reorganization, the operating committee ceased to exist. In May 2002, Mr. Gyra assumed the committee’s responsibilities.


author: Cipabick, J. Pigott, J. (dissenting).

text:
    [ 886 NE2d 156, 856 NYS2d 534]
    The People of the State of New York, Respondent, v Gary White, Appellant.
    Argued February 13, 2008;
    decided March 20, 2008

      POINTS OF COUNSEL

      Paul Skip Laisure, New York City, and Lynn W.L. Fahey for appellant.
    The trial court erred in refusing to suppress appellant’s post -Miranda confessions, which were part of a single custodial police interrogation that began before warnings were administered and continued without a pronounced break. (People v Chapple, 38 NY2d 112; Missouri v Seibert, 542 US 600; People v Bethea, 67 NY2d 364; Escobedo v Illinois, 378 US 478; Miranda v Arizona, 384 US 436; Dickerson v United States, 530 US 428; People v Tanner, 30 NY2d 102; Oregon v Elstad, 470 US 298; Moran v Burbine, 475 US 412; People v Lange, 77 AD2d 632.)

      Charles J. Hynes, District Attorney, Brooklyn (Camille O’Hara Gillespie and Leonard Joblove of counsel), for respondent.
    Defendant’s claim that his post -Miranda admissions should have been suppressed is meritless because the police did not interrogate defendant prior to giving him Miranda warnings, and because, in any event, any pre-Miranda interrogation was brief, defendant made no incriminatory response and there was no continuous interrogation of defendant that rendered ineffective the Miranda warnings given to defendant after an interval of more than 15 minutes. (Miranda v Arizona, 384 US 436; Oregon v Elstad, 470 US 298; People v Chapple, 38 NY2d 112; Arizona v Mauro, 481 US 520; Rhode Island v Innis, 446 US 291; People v Lynes, 49 NY2d 286; People v Rivers, 56 NY2d 476; People v Rodriquez, 39 NY2d 976; People v Webb, 224 AD2d 464; People v Boyd, 21 AD3d 1428.)
   OPINION OF THE COURT

Cipabick, J.

This appeal requires us to determine whether defendant’s post -Miranda statements made to the police after being subjected to a brief period of un-Mirandized custodial interrogation, or its functional equivalent, should have been suppressed. Under the circumstances of this case, we conclude that suppression was not required and the post -Miranda statements were properly received in evidence.

Facts

The evidence at trial reveals that on June 1, 2002, at approximately 8:30 p.m., defendant Gary White shot and killed Albert Hansen on Flatbush Avenue in Brooklyn. Detectives Frank Byrne and Robert Sommer were assigned to investigate the shooting. A week later, on June 9, 2002, at approximately 2:00 a.m., Police Officer Joseph Conde, responding to an unrelated domestic violence complaint made by defendant’s girlfriend, arrested defendant. At the time of defendant’s arrest, he was intoxicated. Defendant’s girlfriend advised Conde that defendant was involved in the Flatbush Avenue shooting. She described a construction area that corresponded to the location where Hansen had been shot twice in the head. Later that morning, Conde informed Byrne that defendant’s girlfriend had implicated White in the Flatbush Avenue shooting. Byrne then brought defendant’s girlfriend to the precinct to confirm the allegation.

That evening, at approximately 7:30 p.m., after spending over 17 hours in a holding cell (much of it sleeping) defendant was placed in a lineup. The only witness to the shooting was a female companion who had been walking alongside the victim when the shooting occurred, and she was unable to identify defendant from the lineup. At approximately 9:30 p.m., defendant was brought to an office for questioning by the detectives. Once there, defendant inquired why he had been placed into a lineup. In response, Sommer produced a computer generated arrest photograph of the victim. Defendant responded, “What about him?” Byrne stated “he was killed, and he was either killed in cold blood, or there was a reason for it.” Defendant was then asked whether he would “like to tell his side of the story,” and he responded, “I’ll tell you everything. Get me Newports and a Pepsi.” This initial exchange took approximately five minutes without any Miranda warnings.

Byrne then left the office to procure the requested items while Sommer remained with defendant, engaging in small talk. Byrne returned 15 to 20 minutes later and allowed defendant to drink his soda and smoke a cigarette. At approximately 10:00 p.m., Byrne read defendant his Miranda rights from a card. Defendant acknowledged that he understood his rights and signed and dated the card. Defendant also indicated his willingness to speak with the detectives.

Initially, defendant’s statements as to his whereabouts on the day of the shooting were exculpatory. Defendant told the detectives that, on that date, he was in Queens visiting a friend from 7:30 p.m. until the next morning. The detectives explained to defendant that they knew his alibi was fabricated and that he should tell the truth. In response, defendant rolled up his sleeves and showed the detectives large scars on both arms. Defendant stated that Hansen caused the injuries during a mugging, allegedly committed 16 or 17 years earlier. He further indicated that on the day of the shooting, Hansen had again robbed and threatened to kill him. When he saw Hansen walking down Flatbush Avenue with another person later that day, he ran up to them, pushed the other person aside, and shot Hansen twice.

At the detective’s request, defendant provided a written statement but omitted the shooting. When confronted by the detectives regarding the omission, defendant prepared a second handwritten statement in which he admitted to shooting the victim. After defendant completed his written accounts of the shooting, he was provided with a meal, consumed it and then felt ill, but did not request medical treatment. Defendant agreed to give a videotaped confession and at approximately 1:30 a.m., on June 10, 2002, an assistant district attorney again advised defendant of his Miranda rights, this time on videotape. At the conclusion of the Miranda warnings, defendant for the first time requested counsel, at which time the videotaping ceased.

At the suppression hearing, defendant asserted that the preMiranda exchange with the police constituted an interrogation. Defendant further claimed that there was no attenuation between the initial interrogation, the subsequent administration of Miranda rights and the “Mirandized” statements.

Supreme Court initially ruled that although there was probable cause to arrest defendant based upon the domestic dispute, the detectives’ actions were accusatory and, therefore, the request for defendant to tell his “side of the story” before the administration of Miranda warnings tainted his subsequent statements. The court further held that the 15 to 20 minute break between the pre- and post -Miranda actions was insufficient to purge the taint from the post -Miranda statements because defendant remained at all times in the presence and custody of the same detectives who made the initial accusations. The court expressed concern that the People failed to sustain their burden to prove beyond a reasonable doubt that defendant’s statements were voluntary and that he had been properly provided with food and bathroom facilities during his detention before questioning commenced.

Upon the People’s motion to renew and reargue, Supreme Court vacated, in part, its initial ruling, holding that defendant’s pre-Miranda statements should remain suppressed, but the court reversed its decision as to the post-Miranda statements, finding them admissible. At the close of proof, the jury convicted defendant of second degree murder, and the court sentenced him to an indeterminate prison term of 22 years to life.

On appeal, defendant asserted that the court should have suppressed, as involuntary, his post -Miranda statements because they were the result of a continuing custodial interrogation that began before the administration of Miranda warnings. Defendant further asserted that suppression of the post-Miranda statements was warranted under People v Chapple (38 NY2d 112 [1975]) as the statements were given without a pronounced break. The Appellate Division affirmed the conviction, concluding that defendant had been subjected to “a brief period of custodial interrogation or its functional equivalent” (40 AD3d 662, 663 [2007]). However, because defendant made “no inculpatory statement, or any statement relating to his conduct in connection with the crime under investigation, until after warnings had been properly given and waived,” the court, relying on People v Paulman (5 NY3d 122 [2005]), held that there was “no need to determine whether the pre- and post-Miranda sessions were part of a ‘single continuous chain of events’ ” (id.). A Judge of this Court granted leave to appeal, and we now affirm on different grounds.

Discussion

In Chapple, we held that in order for Miranda warnings

“to be effective . . . [they] must precede the subjection of a defendant to questioning. Later is too late, unless there is such a definite, pronounced break in the interrogation that the defendant may be said to have returned, in effect, to the status of one who is not under the influence of questioning” (38 NY2d at 115).

In Paulman, we stated that in order

“[t]o determine whether there is a ‘single continuous chain of events’ under Chappie, New York courts have considered a number of factors, including the time differential between the Miranda violation and the subsequent admission; whether the same police personnel were present and involved in eliciting each statement; whether there was a change in the location or nature of the interrogation; the circumstances surrounding the Miranda violation, such as the extent of the improper questioning; and whether, prior to the Miranda violation, defendant had indicated a willingness to speak to police. No one factor is determinative and each case must be viewed on its unique facts. The purpose of the inquiry is to assess where there was a sufficiently ‘definite, pronounced break in the interrogation’ to dissipate the taint from the Miranda violation. If so, the Mirandized statement is admissible at trial despite the prior, unwarned statement” (5 NY3d at 130-131 [emphasis added and citation omitted]).

Defendant here made no statement that was either inculpatory or related to the shooting until after the Miranda warnings had been properly administered by Byrne and after he had properly waived his Miranda rights. As we held in People v Kinnard (62 NY2d 910, 912 [1984]), “the absence of any incriminating responses to . . . police questioning” can be one of several factors supporting a conclusion that post -Miranda confessions are not tainted. The absence of pre-Mirandized inculpatory statements alone cannot, however, preclude an inquiry as to whether the pre- and post -Miranda sessions were part of a continuous chain of events as suggested by the Appellate Division.

Applying the Paulman factors and examining the circumstances surrounding the Miranda violation, defendant’s post-Miranda statements are admissible. In contrast to Chapple and People v Bethea (67 NY2d 364 [1986]), where defendants were subjected to extensive un-Mirandized custodial interrogations, here the initial exchange lasted no longer than five minutes. Although the same police personnel were involved in eliciting each pre- and post-warned statement, and there was no change in the location of the interrogation, the brevity of the initial exchange is significant under Paulman. Although the time differential between defendant’s pr e-Miranda statement and the subsequent admission consisted of 15 to 20 minutes, on the facts of this case the break was sufficiently pronounced to dissipate the taint of the Miranda violation.

It was not until after defendant had smoked a cigarette and consumed the soda he had requested that Byrne began to read defendant his Miranda warnings. Defendant acknowledged that he understood his rights and signed the Miranda card prior to making any substantive statement about the case, and the record shows that defendant freely indicated his willingness to speak. Certainly, the police should have administered Miranda warnings initially (see Missouri v Seibert, 542 US 600, 617 [2004] [“the question-first tactic effectively threatens to thwart Miranda’s purpose of reducing the risk that a coerced confession would be admitted”]). Nevertheless, we find that this record reveals that after the very brief pr e-Miranda questioning “defendant may be said to have returned, in effect, to the status of one who is not under the influence of questioning” (Chapple, 38 NY2d at 115). Indeed, after receiving Miranda warnings, defendant first gave an exculpatory statement and provided an exculpatory alibi. Only upon being confronted with the untruthfulness of his alibi did he begin to make an inculpatory statement.

We cannot say, under the circumstances of this case, “that the defendant’s ‘will [was] overborne and his capacity for self-determination critically impaired,’ ” and therefore “ ‘the use of his confession [does not] offend[ ] due process’ ” (People v Anderson, 42 NY2d 35, 41 [1977], quoting Culombe v Connecticut, 367 US 568, 602 [1961]).

Thus we conclude, as a matter of law, that the circumstances presented here do not constitute a single continuous chain of events and that the Mirandized statements in this case were admissible and properly introduced at defendant’s trial notwithstanding the prior unwarned custodial interrogation. Defendant’s remaining arguments are without merit.

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

Pigott, J. (dissenting).

I respectfully dissent. In my view, Supreme Court erred in refusing to suppress defendant’s post-Miranda statements, which were part of a single custodial police interrogation that began before warnings were administered and continued without a pronounced break. Defendant was intoxicated at the time of his arrest and was interrogated following a 19 hour detention.

The New York Constitution grants broader protection than the Fifth Amendment of the United States Constitution in cases involving successive interrogations where a Mirandized statement is preceded by an improper, un-Mirandized admission (see People v Bethea, 67 NY2d 364, 368 [1986]). The view of the U.S. Supreme Court, as expressed in Oregon v Elstad (470 US 298 [1985]), is that, once Miranda warnings are given, the “taint” of a prior, unwarned statement is dissipated, rendering the subsequent statement admissible at trial. The Supreme Court concluded that:

“[A] careful and thorough administration of Miranda warnings serves to cure the condition that rendered the unwarned statement inadmissible. The warning conveys the relevant information and thereafter the suspect’s choice whether to exercise his privilege to remain silent should ordinarily be viewed as an ‘act of free will’ ” (id. at 310-311).

In contrast, this Court has stated that, “where an improper, unwarned statement gives rise to a subsequent Mirandized statement as part of a ‘single continuous chain of events,’ there is inadequate assurance that the Miranda warnings were effective in protecting a defendant’s rights, and the warned statement must also be suppressed” (People v Paulman, 5 NY3d 122, 130 [2005]). The factors to be considered in determining whether there is a “single continuous chain of events” include

“the time differential between the Miranda violation and the subsequent admission; whether the same police personnel were present and involved in eliciting each statement; whether there was a change in the location or nature of the interrogation; the circumstances surrounding the Miranda violation, such as the extent of the improper questioning; and whether, prior to the Miranda violation, defendant had indicated a willingness to speak to police” {id. at 130-131).

While “[n]o one factor is determinative and each case must be viewed on its unique facts” (id. at 131), this Court has stated that the purpose of the inquiry is to assess whether “there was a sufficiently ‘definite, pronounced break in the interrogation’ to dissipate the taint from the Miranda violation” (id., quoting People v Chapple, 38 NY2d 112, 115 [1975]).

As the majority notes, the Appellate Division’s determination that defendant was subjected to a brief period of custodial interrogation or its functional equivalent prior to receiving Miranda warnings is a mixed question of law and fact that must be affirmed unless no record basis exists for this conclusion (see Paulson, 5 NY3d at 129; People v Cruz, 90 NY2d 961, 962 [1997]). In my view, record support exists for the Appellate Division’s conclusion that defendant was interrogated because, prior to advising defendant of his Miranda rights the detectives asked defendant if he wanted to “tell his side of the story” after showing him a picture of the victim and telling him that he was murdered “in cold blood, or there was a reason for it.” As the Appellate Division noted, such questioning was likely to elicit an incriminating response from defendant.

Furthermore, the fact that defendant’s pr e-Miranda statement was not incriminating does not eliminate the need to determine whether the sessions were part of a “single continuous chain of events.” Adopting such a principle would significantly alter this Court’s Chapple-Bethea rule by rendering it inapplicable in all cases except where the defendant confesses or implicates himself in a crime prior to receiving Miranda warnings. If the pre- and post-Miranda interrogations are part of a “single continuous chain of events,” there still exists “inadequate assurance that the Miranda warnings were effective in protecting a defendant’s rights” (Paulman, 5 NY3d at 130), even if defendant does not make an incriminating statement prior to receiving Miranda warnings. Concluding that only inculpatory statements trigger the “single continuous chain of events” rule would not, in my opinion, adequately deter prolonged, un-Mirandized police interrogation.

Applying the Paulman factors to determine whether the questioning of defendant was part of a “single continuous chain of events,” it seems clear that there was no pronounced break between the pre-Miranda statement by defendant (in which he agreed to tell the detectives “everything” if they brought him cigarettes and Pepsi) and his post -Miranda confession. The same detectives performed the interrogation before and after administration of the Miranda warnings (in fact, one detective remained with defendant while the cigarettes and soft drink were being retrieved) and there was no change in the location or nature of the interrogation (see Paulman, 5 NY3d at 130-131). Further, unlike the case in Paulman, where the Court noted that the defendant had previously expressed a willingness to speak with the police prior to the Miranda violation, there is no indication here that defendant wished to speak with the police before the Miranda violation occurred. Accordingly, in my view, defendant’s post -Miranda statements should have been suppressed.

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

Order affirmed.

       The People later explained at the suppression hearing that the detectives had been informed by defendant’s girlfriend that he would offer the visit to his friend’s home as an alibi should he be questioned regarding the Flatbush Avenue homicide.