text:
    [986 NE2d 898, 964 NYS2d 64]
    Sunrise Check Cashing and Payroll Services, Inc., et al., Respondents, v Town of Hempstead, Appellant.
    Argued January 7, 2013;
    decided February 14, 2013

      POINTS OF COUNSEL

      Berkman Henoch Peterson Peddy & Fenchel, P.C., Garden City (Peter Sullivan, Todd Steckler, Robert Carruba and Daniel Evers of counsel), for appellant.
    The Appellate Division improperly declared the subject Town Zoning Ordinance invalid as preempted by a conflict with the state Banking Law with respect to the licensing of check-cashing establishments. (Monroe-Livingston Sanitary Landfill v Town of Caledonia, 51 NY2d 679; People v New York Trap Rock Corp., 57 NY2d 371; DJL Rest. Corp. v City of New York, 96 NY2d 91; Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500; American Broadcasting Cos. v Siebert, 110 Misc 2d 744; Matter of Union Indem. Ins. Co. of N.Y., 89 NY2d 94; Matter of Myer, 184 NY 54; Commissioners of State Ins. Fund v Low, 3 NY2d 590; Matter of Shea, 309 NY 605.)

      Forchelli, Curto, Deegan, Schwartz, Mineo & Terrana, LLP, Uniondale (Jeffrey G. Stark and Richard A. Blumberg of counsel), for respondents.
    I. The Appellate Division properly held that section 302 (K) of article XXXI of the Building Zone Ordinance of the Town of Hempstead is unenforceable by reason of conflict preemption. (DJL Rest. Corp. v City of New York, 96 NY2d 91; Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99; Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500; Jancyn Mfg. Corp. v County of Suffolk, 71 NY2d 91; Vatore v Commissioner of Consumer Affairs of City of N.Y., 83 NY2d 645; Matter of Moran Towing & Transp. Co. v New York State Tax Commn., 72 NY2d 166; Oneida Sav. Bank of Oneida v Tese, 108 AD2d 1042; Matter of Trump-Equitable Fifth Ave. Co. v Gliedman, 62 NY2d 539; Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Madison-Oneida Bd. of Coop. Educ. Servs. v Mills, 4 NY3d 51.) II. Section 302 (K) of article XXXI of the Building Zone Ordinance of the Town of Hempstead is unenforceable by reason of field preemption. (Vatore v Commissioner of Consumer Affairs of City of N.Y., 83 NY2d 645; DJL

      Rest. Corp. v City of New York, 96 NY2d 91; People v De Jesus, 54 NY2d 465; Robin v Incorporated Vil. of Hempstead, 30 NY2d 347; Albany Area Bldrs. Assn. v Town of Guilderland, 74 NY2d 372; Mayor of City of N.Y. v Council of City of N.Y., 4 Misc 3d 151; Matter of Tze Chun Liao v New York State Banking Dept., 74 NY2d 505.) III. Section 302 (K) of article XXXI of the Building Zone Ordinance of the Town of Hempstead is an invalid exercise of the zoning power. (Suffolk Interreligious Coalition on Hous. v Town of Brookhaven, 176 AD2d 936; Louhal Props. v Strada, 191 Misc 2d 746, 307 AD2d 1029; Matter of Augenblick v Town of Cortlandt, 66 NY2d 775; De Sena v Gulde, 24 AD2d 165; Matter of Old Country Burgers Co. v Town Bd. of Town of Oyster Bay, 160 AD2d 805; Amerada Hess Corp. v Town of Oyster Bay, 36 AD3d 729; Spilka v Town of Inlet, 8 AD3d 812; McMinn v Town of Oyster Bay, 66 NY2d 544; Burger King Corp. v Village of Larchmont, 89 Misc 2d 901, 52 AD2d 898, 41 NY2d 1097.) IV Section 302 (K) of article XXXI of the Building Zone Ordinance of the Town of Hempstead denies respondents the equal protection of the laws. (Cleburne v Cleburne Living Center, Inc., 473 US 432; Continental Bldg. Co. v Town of N. Salem, 211 AD2d 88.)

      Eric T. Schneiderman, Attorney General, New York City (Matthew W. Grieco, Barbara D. Underwood and Richard Dearing of counsel), for Superintendent of Financial Services, amicus curiae.
    I. New York State Department of Financial Services’s issuance of licenses to plaintiffs does not preempt the Town’s Zoning Ordinance. (Stringfellow’s of N.Y. v City of New York, 91 NY2d 382; Incorporated Vil. of Nyack v Daytop Vil., 78 NY2d 500; Matter of Tze Chun Liao v New York State Banking Dept., 74 NY2d 505; Consolidated Edison Co. of N.Y. v Town of Red Hook, 60 NY2d 99.) II. New York State Department of Financial Services takes no position as to whether the ordinance is a legitimate exercise of the Town’s zoning power. (American Broadcasting Cos. v Siebert, 110 Misc 2d 744; Group House of Port Washington v Board of Zoning & Appeals of Town of N. Hempstead, 45 NY2d 266.)
   OPINION OF THE COURT

Smith, J.

We hold that a zoning measure that prohibits check-cashing establishments in a town’s business district is invalid, because it violates the principle that zoning is concerned with the use of land, not with the identity of the user.

The provision in question is section 302 (K) of article XXXI of the Building Zone Ordinance of the Town of Hempstead, adopted January 10, 2006. It says in pertinent part: “In any use district except Y Industrial and LM Light Manufacturing Districts, check-cashing establishments are hereby expressly prohibited” (§ 302 [K] [1]).

The only document explaining the purpose of this enactment is a memorandum from a deputy town attorney dated December 13, 2005, the date of a public hearing held on the proposal that became section 302 (K). The subject of the memorandum is “Public Policy behind Check Cashing Ordinance.” The memorandum says that the measure “represents sound public policy” because:

“Essentially, it serves the interest of encouraging young people and those of lower incomes to establish savings and checking accounts, do their banking at sound and reputable banking institutions, and develop credit ratings. It also eliminates predatory and exploitative finance enterprises from commercial areas, which is beneficial because these enterprises tend to keep a neighborhood down.”

The memorandum consists of several pages criticizing check-cashing establishments on social policy grounds. It says that such establishments make it convenient for young and lower income people “to remain in the cash-only economy” and adds: “This is bad for society as a whole.” The memorandum refers to studies finding that “check-cashing establishments actually exploit the poor and African Americans.” It concludes that the proposal under consideration “encourages young and lower income people to open up bank accounts, save their money, and develop a credit rating” and “also removes a seedy type of operation, akin to pawnshops and strip clubs, from the commercial areas of the Town.” Section 302 (K) was adopted by the Town Board some four weeks after the memorandum was issued.

Several check-cashing establishments brought the present action, seeking a declaratory judgment that section 302 (K) is invalid, and an injunction against its enforcement. Supreme Court granted summary judgment dismissing the complaint. The Appellate Division reversed, holding section 302 (K) to be preempted by article IX-A of the Banking Law and related regulations, which govern the licensing of check-cashers (Sunrise Check Cashing & Payroll Servs., Inc. v Town of Hempstead, 91 AD3d 126 [2d Dept 2011]); the Town appeals to us as of right, pursuant to CPLR 5601 (b) (1). We affirm without reaching the preemption issue, because the challenged provision is not a proper exercise of the zoning power.

A town’s power to adopt zoning regulations derives from Town Law § 261, which authorizes town boards

“to regulate and restrict the height, number of stories and size of buildings and other structures, the percentage of lot that may be occupied, the size of yards, courts, and other open spaces, the density of population, and the location and use of buildings, structures and land for trade, industry, residence or other purposes” (see also Town Law § 263 [listing the purposes of zoning]).

Our cases make clear that the zoning power is not a general police power, but a power to regulate land use: “[I]t is a fundamental principle of zoning that a zoning board is charged with the regulation of land use and not with the person who owns or occupies it” (Matter of Dexter v Town Bd. of Town of Gates, 36 NY2d 102, 105 [1975] [citations omitted]; see also Matter of St. Onge v Donovan, 71 NY2d 507, 515, 517 [1988]).

The provision at issue here contradicts this principle. It is clear from the memorandum of the deputy town attorney that section 302 (K) was directed at the perceived social evil of check-cashing services, which were thought to exploit the younger and lower income people who are their main customers. Whatever the merits of this view as a policy matter, it cannot be implemented through zoning. Section 302 (K) is obviously concerned not with the use of the land but with the business done by those who occupy it. It is true that there are cases in which the nature of the business is relevant to zoning because of the businesses’ “negative secondary effects” on the surrounding community; this is true of so-called “adult entertainment” uses (see Stringfellow’s of N.Y. v City of New York, 91 NY2d 382, 395-396 [1998]), but, despite the reference to “pawnshops and strip clubs” in the deputy town attorney’s memorandum, the Town has not tried to show and does not argue that check-cashing services are in a similar category.

Indeed, the Town makes no attempt to defend the purposes advanced in the memorandum as legitimate objects of the zoning power. Instead, the Town tries to save section 302 (K) by attributing to it a different purpose: protecting the health and safety of the community against the dangers created by armed robbery. The Town quotes the observation of the court in American Broadcasting Cos. v Siebert (110 Misc 2d 744, 746, 747 [Sup Ct, NY County 1981]) (a case arising under the Freedom of Information Law) that check-cashing facilities “are and have been over the years, the subject of robberies, kidnappings and murders” and that “the risk of robberies inherently exists in the check-cashing business.” There is no evidence that the Town Board of Hempstead, when it enacted section 302 (K), was worrying about armed robbery; but the Town, relying on the presumption of validity accorded to zoning legislation (see Robert E. Kurzius, Inc. v Incorporated Vil. of Upper Brookville, 51 NY2d 338, 344 [1980]; Town of Huntington v Park Shore Country Day Camp of Dix Hills, 47 NY2d 61, 65-66 [1979]) argues that, if any valid purpose for the enactment can be imagined, the body enacting it must be deemed to have had that purpose in view.

We reject the Town’s argument. Deference to legislative enactments, at least where the issue is abuse of the zoning power, does not go as far as the Town would have us go. The record here clearly refutes the idea that section 302 (K) was a public safety measure. Assuming, without deciding, that a concern about armed robberies would justify a zoning regulation, this one cannot be justified on that ground.

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

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

Order affirmed, with costs.


source: Caselaw Access Project

author: Read, J. Pigott, J. (concurring).

license: Public Domain

text:
    [987 NE2d 244, 964 NYS2d 467]
    Paula White, Individually and as Executrix of the Estate of Leonard White, Respondent, v Dennis Farrell et al., Appellants.
    Argued February 12, 2013;
    decided March 21, 2013

      POINTS OF COUNSEL

      Milford, Lynch & Shannon, Syracuse (John A. Cirando, Bradley E. Keem and Elizabeth deV. Moeller of counsel), for appellants.
    The sellers are entitled to actual and consequential damages. (Merritt Hill Vineyards v Windy Hgts. Vineyard, 94 AD2d 947; Weiss v Karch, 62 NY2d 849; Todd v Gamble, 148 NY 382; Matter of John P. Burke Apts. v Swan, 137 AD2d 321; Matter of Estate of Taylor v State of New York, 39 AD2d 984; City of Yonkers v State of New York, 49 AD2d 647; Di Scipio v Sullivan, 30 AD3d 677; Ashton v McLenithan, 224 AD2d 749; Tesmer Bldrs. v Cimato, 217 AD2d 953; Ryan v Corbett, 52 AD3d 1270.)

      Mackenzie Hughes LLP, Syracuse (W. Bradley Hunt of counsel), for respondent.
    I. The Supreme Court and the Fourth Department correctly ruled that the sellers sustained no actual damages. (Astoria Caterers, Inc. v J&P 1870 Realty Corp., 24 AD3d 478; Ryan v Corbett, 52 AD3d 1270; Matzkowitz v Prince, 195 AD2d 842; Hayden v Pinchot, 172 App Div 102; Brushton-Moira Cent. School Dist. v Thomas Assoc., 91 NY2d 256; Procopis v G. P. P. Rests., 43 AD2d 974; Di Scipio v Sullivan, 30 AD3d 677; Ashton v McLenithan, 224 AD2d 749; Tesmer Bldrs. v Cimato, 217 AD2d 953; Abdella v Foley, 75 AD2d 983.) II. The Supreme Court correctly ruled that the sellers are not entitled to recover consequential damages—a ruling that the sellers did not appeal to the Fourth Department. (Clifford R. Gray, Inc. v City School Dist. of Albany, 277 AD2d 843; City of Mount Vernon v Mount Vernon Hous. Auth., 235 AD2d 516; Matter of Seitelman v Lavine, 36 NY2d 165; Tator v Salem, 81 AD2d 727; Di Scipio v Sullivan, 30 AD3d 677; Czarnikow-Rionda Co. v Federal Sugar Ref. Co., 255 NY 33.) III. In the alternative, if this Court determines that the lower courts erred in ruling as a matter of law that the sellers are not entitled to damages, this Court should remand this case to the Supreme Court for a determination of the amount—if any—of damages.
   OPINION OF THE COURT

Read, J.

We are called upon in this appeal to decide the measure of a seller’s damages for a buyer’s breach of a contract to sell real property. We hold that the measure of damages is the difference, if any, between the contract price and the fair market value of the property at the time of the breach. The price obtained by the seller on a later resale of the property may well bear on damages, depending upon the circumstances. As matters stand in this case, there is conflicting evidence as to the property’s fair market value when the buyer defaulted, an issue of fact, which precludes summary judgment.

I

In May 2004, defendants Dennis and Nancy Farrell decided to sell their lakeside property in Skaneateles, New York. The Farrells originally purchased this land in October 2002 and razed the existing structures—a seasonal home, guest cottages and a garage—to build themselves a new single-family, year-round residence as a second home. They resided in New Jersey at the time, but by 2004 the Farrells were considering moving to South Carolina. Because of construction delays, the house in Skaneateles was not completed until March or April 2005; a certificate of occupancy was issued on May 31, 2005, a year after the Farrells first listed the property for sale.

On June 12, 2005, the Farrells’ real estate agent, Linda Roche, showed the property to plaintiff Paula White and her now-deceased husband, Leonard. That same day, the Whites signed a contract to buy the property for $1,725 million, the Farrells’ asking price, and tendered a $25,000 deposit. The $1.7 million balance was to be paid in cash at a closing to be held “on or about July 10, 2005.” The contract, which did not state that time was of the essence, was contingent on a satisfactory home inspection; resolution of a number of construction-related items, including one identified as “drainage finished”; and attorney approval. The Farrells executed the contract on June 13, 2005.

At the time the parties reached this agreement, a drainage system intended to divert surface water away from the house was apparently still under construction on the north side of the property, and the leach field for the raised bed septic system was soggy. On June 15, 2005, Mr. Farrell wrote Ms. Roche to advise that “[i]n response to our buyer [i.e., Mr. White] and his concerns” he was prepared to “fix or credit him to make [the] house as close to what he wants as possible.” He mentioned one project that would take five or six weeks to complete, and identified the steps then being taken to correct “[t]he water between the garage and [the] house” and “[t]he water in front of the garage.” Mr. Farrell added that he lived too far away to hire or monitor contractors, and so would agree to reduce the contract price by $10,000 to cover other items that Mr. White might “choose[ ] to change or modify like bench tops, locks, paintingt,] new front lawn[,] etc.” Ms. Roche conveyed this information to the Whites’ real estate agent; retained a plumber and septic system expert to investigate and remedy water and drainage problems; and kept the Whites’ real estate agent closely apprised of progress.

The house inspection was conducted on June 18, 2005. On June 22, 2005, the Whites’ attorney approved the contract, subject to proof of real estate taxes being $30,000 or less, and the parties executed a contract addendum. By the addendum, the Whites removed all contingencies in exchange for the Farrells’ promise to complete several enumerated tasks, including finishing the drainage system on the north and south sides of the house, and to provide the $10,000 credit. According to Mr. Farrell, while “it was known” when the addendum was signed “that a portion of the property was wet and/or having drainage issues,” the cause of the dampness, which he claimed was not present when he and his wife signed the property condition disclosure statement in May 2004 (see Real Property Law § 462), had yet to be figured out. The addendum did not set any time frame or deadline for completion of the work the Farrells committed to accomplish.

Two weeks later, by letter dated July 7, 2005, the Whites’ attorney notified the Farrells’ attorney that his clients had “elected to terminate the contract [because] upon closer inspection . . . the drainage situation [might] never be rectified.” He indicated they reached this conclusion after Mr. White toured the site that day with his construction consultant. The Farrells’ attorney responded by letter dated July 8, 2005, essentially taking the position that the Whites were well-aware when they signed the contract that additional measures needed to be implemented to fix the septic system and deal with surface water runoff. He outlined what had been done to date, and observed that Mr. Farrell considered one of the issues now raised by the Whites—the supposed necessity for a retaining wall— “nothing more than a fabricated reason to cancel the contract.” He closed by saying that Mr. Farrell would be “more than willing” to meet with Mr. White on the premises to review the work completed and address his concerns, but that “[i]f [Mr. White was] unwilling to discuss the ‘alleged issues’ in a good faith manner, then we will have no alternative but to relist the property for sale and hold your clients responsible for the damages which might result.” On July 13, 2005, the Whites’ attorney responded that Mr. White had “no intentions of going forward with the contract,” and was “extremely upset that the drainage problem was never disclosed, and in fact [the property condition disclosure statement] affirmatively denie[d] any drainage problem” existed.

On October 4, 2005, the Farrells’ attorney sent a time-is-of-the-essence letter to the Whites’ attorney, stating that Mr. Farrell had “resolved all issues” regarding required septic modifications on his property; declaring the place, time and date (Oct. 24, 2005) of closing; and enclosing the relevant closing documents. The Whites neither responded to this letter nor showed up at the closing. On July 23, 2005, they had signed a contract of purchase and sale for another piece of property on Skaneateles Lake. The Whites closed on this property, for which they paid $1.7 million, on August 24, 2005.

On June 6, 2006, the Whites sued the Farrells to recover their $25,000 down payment, alleging fraudulent inducement, negligent misrepresentation and that the Farrells were not ready, willing and able to close as of the declared closing date in October 2005. In particular, the Whites claimed that they made the offer to purchase and tendered the earnest money in reliance on the Farrells’ representation in the property condition disclosure report, attached to the contract, that there were no flooding, drainage or grading problems resulting in standing water on the property. On July 31, 2006, the Farrells answered and counterclaimed for damages for breach of contract.

During discovery, the Farrells’ real estate agent, Ms. Roche, was deposed by the Whites’ attorney. She testified that she had worked as a broker in the Skaneateles area since 1980; that she would generally be considered an expert regarding the value of properties around the lake; and that real estate appraisers and bankers looked to her when they wanted an accurate estimate of value in the Skaneateles real estate market. When asked a series of questions about fair market value, Ms. Roche opined that $1,725 million was the fair market value of the Farrells’ property in May 2004 (when it was first listed), June 2005 (when the contract was signed), July 2005 (when the Whites repudiated the contract), and October 2005 (the date set for conveying title). She added that $1,725 million was also the fair market value of the Farrells’ property in the spring and summer of 2006 “because everything still was selling at . . . 1.5 to 3 million in 2006 . . . We were still in a very heated market.” Ms. Roche acknowledged that the only offer the Farrells ever received in the $1,725 million “range” was from the Whites. On January 11, 2007, while this lawsuit was pending, the Farrells accepted a purchase offer of $1,376,550 from a third party, to whom they conveyed the property on March 9, 2007.

On December 14, 2009, the Farrells moved for summary judgment to dismiss the Whites’ complaint and award them damages on their counterclaim. They sought $348,450 in actual damages (the difference between the original contract price of $1,725 million agreed to by the WTdtes and the eventual sale price of $1,376,550), and consequential damages of $217,636.88 (apparently, the sum of mortgage and tax payments made on the property from July 7, 2005 until the closing with the ultimate purchaser on March 9, 2007). The Whites opposed the Farrells’ motion and cross-moved for summary judgment to dismiss the counterclaim and compel the Farrells to return the $25,000 deposit.

On February 9, 2010, Supreme Court handed down a bench decision disposing of the parties’ motions. The judge concluded that the Whites had breached the contract, and so were not entitled to return of their $25,000 down payment. He adopted as the measure of the Farrells’ actual damages the standard stated in Webster v Di Trapano (114 AD2d 698, 699 [3d Dept 1985])—i.e., “the difference between the contract price and the market value of the real property at the time of the breach.” The judge then reasoned that, in view of Ms. Roche’s deposition testimony that the property’s “market value at the time of the breach was, in fact, the same as the contract price,” the buyers (the Whites) had established that the sellers (the Farrells) did not suffer any actual damages on account of the buyers’ breach. Additionally, he ruled that the Farrells’ claim for consequential damages was “not valid.” The Farrells appealed from so much of Supreme Court’s subsequent order, entered on June 9, 2010, as determined that they suffered no actual damages; the Whites did not cross-appeal. The Appellate Division unanimously affirmed the order, insofar as appealed from, without opinion (87 AD3d 1309 [4th Dept 2011]). We subsequently granted the Farrells leave to appeal (18 NY3d 809 [2012]).

II

The Farrells argue that Supreme Court should have measured damages by applying a principle articulated by the Third Department in Di Scipio v Sullivan (30 AD3d 660 [3d Dept 2006]). In that case, the buyer in a real estate transaction died suddenly several days before the scheduled closing. Following the appointment of an administrator for the buyer’s estate, the seller declared time to be of the essence and scheduled two closing dates. When the administrator failed to close, the seller brought an action for breach of contract. Supreme Court granted, and the Third Department affirmed, an order determining that the administrator breached the contract, which entitled the seller to retain the 10% down payment of $99,900 as damages.

The seller then sought an inquest, claiming that he had suffered further actual or consequential damages. After the inquest, Supreme Court ruled that the seller had not proven any additional damages by a preponderance of the evidence. The seller then appealed, claiming that he had shown further damages consisting of a real estate broker’s commission owed and real estate taxes, mortgage interest, maintenance expenses and utilities paid. The Third Department disagreed, stating in dictum that

“the measure of damages incurred as a result of a breach of a real estate contract is either the difference between the contract price and a subsequent lower sale price or, where no subsequent sale has occurred, the difference between the contract price and the market value of the real property at the time of breach. Here, [the seller] spurns the commonly accepted measure of damages and, instead, seeks recovery for the aforementioned items,” which the court considered to be unrecoverable consequential damages or expenses not proximately caused by the buyer’s breach (see Di Scipio v Sullivan, 30 AD3d 677, 677-678 [3d Dept 2006] [emphasis added and citations omitted]).

The Farrells take Di Scipio to mean that the measure of a seller’s actual damages for a buyer’s breach of a contract to sell realty is always the difference between the contract price and any later lower selling price, and ask us to adopt this as the rule of decision. The majority of jurisdictions, however, adhere to a different standard, succinctly explained in Williston on Contracts as follows:

“Unless the vendor has elected to accept, as the exclusive remedy, liquidated damages represented by the purchaser’s deposit, where the vendor sues the purchaser for breach of contract, the vendor may recover for the loss of the bargain, and the generally accepted measure of damages is the difference between the contract price and the fair market value of the property at the time of the breach. The vendor may recover damages in the amount of the contract price reduced by the fair market value of the property, less any deposit or earnest money paid by the purchaser. . . . The price obtained by the vendor on a later resale of the property may be regarded as competent evidence of its fair market value on the date of the purchaser’s breach, provided that the market conditions are similar and the time elapsed between the date of the breach and the date of the resale is not too great” (13 Lord, Williston on Contracts § 66:80 [4th ed] [emphasis added]; see also 14 Powell on Real Property § 81.04 [2] [b] at 81-183 [Michael Allan Wolf ed, LexisNexis Matthew Bender 2000] [where the buyer breaches a contract for the sale of real property, “(t)he damage award is set by determining the difference between the contract price and the property’s market value at the time of breach”]; Korngold, Seller’s Damages from a Defaulting Buyer of Realty: The Influence of the Uniform Land Transactions Act on the Courts, 20 Nova L Rev 1069, 1073 [1995-1996] [collecting cases and noting that “(c)ourts typically declare that the measure of a seller’s damages for a buyer’s failure to perform under a contract of sale for realty is the difference between the contract price and the market value of the property on the date of the breach”]; Calamari & Perillo’s Hornbook on Contracts § 14.30 [6th ed 2009] [“If the vendee breaches, it seems to be the rule everywhere that the vendor may recover standard contract damages: the difference between the unpaid contract price and the market value of the real property at the time of the breach”]).

We have never before considered the measure of damages for a buyer’s breach of a contract to sell real property. The four departments of the Appellate Division, however, have consistently endorsed the time-of-the-breach rule, although there are certainly cases where the standard used is not stated, or it is not made clear that the resale price is simply evidence of the property’s fair market value at the time of the breach.

In Hayden v Pinchot (172 App Div 102 [1st Dept 1916]), there was conflicting proof at trial of the property’s market value at the time the buyer broke the contract of purchase and sale. The First Department affirmed the trial judge’s finding as to fair market value, concluding that it was not against the weight of the evidence. In so doing, the court observed that “[t]he rule seems to be well settled that the measure of damages for the breach of a contract by the vendee is the difference between the contract price and the market value of the property at the time of the breach” (id. at 105).

The Second Department in Cohen v Kranz (15 AD2d 938 [2d Dept 1962], affd 12 NY2d 242 [1963]) did not state the rule applied to affirm a trial judge’s award of damages amounting to the difference between the contract and resale prices, less the buyer’s down payment. On appeal, we addressed other issues presented by the case. With respect to the measure of damages, we observed only that the sellers “obtained an affirmative recovery on their counterclaim for breach of contract based on the loss they sustained when they sold the house to a third person for what the courts below found to be its fair market value” (id. at 247).

The seller in Procopis v G. P. P. Rests. (43 AD2d 974 [2d Dept 1974]) sought as damages the difference between the contract price and the property’s fair market value at the time of the buyer’s breach, which he argued was the resale price. The judge, after a nonjury trial, agreed and awarded damages in the amount asked for. The Second Department reversed, reasoning that “although the subsequent sale [was] some evidence of the fair market value of the property at the time of the breach, standing alone it [was] insufficient proof . . . upon which to predicate [sellers’] damages,” especially since the terms of the resale were “substantially different . . . from those contained in the contract sued upon” (id. at 975-976).

In Colonial Diversified v Assured Holding Corp. (71 AD2d 1011 [2d Dept 1979]), the judge, after a nonjury trial, dismissed the seller’s counterclaim for damages for breach of contract and directed return of the buyer’s down payment. The Second Department reversed, holding that “it [was] apparent that the [buyer] was the defaulting party, and as a result [was] barred from recovering its down payment, as well as remaining liable for damages sustained by the [sellers] by virtue of its default” (id. at 1012 [citations omitted]). The court noted that at trial the sellers presented expert testimony to show that the market value of the property at the time of the buyer’s breach was $32,000, and also proved they were only able to resell the property for that amount. Accordingly, the Second Department ruled that the sellers were entitled to recover the difference between $32,000 and the contract price, less the down payment already in their possession.

In addition to Di Scipio, the Third Department has in relatively recent years considered four other appeals in cases where the trial judge, after a nonjury trial, assessed damages for a buyer’s breach of a contract to sell realty. In Tator v Salem (81 AD2d 727, 728 [3d Dept 1981]), the Third Department affirmed an award of $10,000 in “direct damages,” which was the difference between the original contract price and the eventual sale price. The decision is silent as to the standard applied.

In Webster, the case relied upon by Supreme Court to support the bench decision and order here, the trial judge computed damages for the buyer’s breach by subtracting the real property’s eventual sale price from the contract price. Citing the First Department’s decision in Hayden, the Third Department “[found] merit in [the sellers’] argument that the proper measure of damages is the difference between the contract price and the market value of the real property at the time of breach” (Webster, 114 AD2d at 699). Since the trial judge “expressly found” that the property’s market value at the time of the breach was higher than the resale price, and this higher figure was supported by the evidence, the court concluded that calculation of damages using the resale price was “inappropriate,” and remitted for purposes of recalculation. (Id.)

The Third Department in Matzkowitz v Prince (195 AD2d 842 [3d Dept 1993], lv denied 83 NY2d 751 [1994]) recast somewhat the rule stated in Webster. There, the seller contended that the trial judge had erred by calculating damages using the price for which the property was sold some 11 months after the breach. The court stated that “[o]rdinarily, ‘[sellers] are entitled to the difference between the price established in their contract with [buyers] and the amount ultimately received for the [real] property’ unless there is evidence that the fair market value at the time of the breach is otherwise” (Matzkowitz, 195 AD2d at 842, quoting Binks v Farooq, 178 AD2d 999, 1001 [4th Dept 1991], lv denied 80 NY2d 752 [1992], discussed later, and citing Tator, Cohen, and Webster, discussed earlier [emphasis added]). And “[w]hile . . . [the buyer] offered expert testimony of market value at the time of the breach in excess of the amount ultimately received, [the sellers’] expert offered contrary opinion evidence which created a credibility issue for determination by the trial court” that the Third Department was “loath to disturb” (id.).

In Ashton v McLenithan (224 AD2d 749 [3d Dept 1996]), the sellers commenced an action alleging fraud and breach of contract for the sale of a parcel of land. The parties reached a settlement agreement in open court whereby the sellers agreed to sell the parcel with a newly constructed home to the buyers for $300,000. The buyers failed to perform in accordance with this agreement, and the sellers sought judgment for the agreed-upon amount. At the subsequent nonjury trial held to determine the sellers’ damages “as the difference in value of the settlement amount and the actual value of the house at the time of the breach,” both parties submitted expert evidence on this issue (id. at 749). The trial judge found the value of the property to be $214,000 “based upon the assessments of value offered by both experts,” and “determined damages to be the difference between the settlement price and the value at the time of the breach” (id. at 750-751). The Appellate Division concluded there was “sufficient evidence for Supreme Court to have made its assessment within the range of values given” (id. at 751). This property was apparently not resold while the lawsuit was pending.

The Fourth Department in Binks, reversing the trial court, ruled that the buyers had breached their contract to purchase the sellers’ apartment complex. Stating that the sellers were “entitled to the difference between the price established in their contract with [the buyers] and the amount ultimately received for the property,” the court awarded the sellers this amount, which was “uncontroverted,” less the buyers’ down payment, ordered to be released from escrow to the sellers (178 AD2d at 1001). In support of its ruling, the Fourth Department cited our decision in Tague Holding Corp. v Harris (250 NY 422 [1929] [the seller was awarded profits lost when the buyer defaulted on an installment contract for the purchase of land that the seller had contracted to buy from a third party]), which deals with consequential damages, Tator and Cohen.

In Tesmer Bldrs. v Cimato (217 AD2d 953 [4th Dept 1995]), the trial court awarded the buyer summary judgment on its claim to recover a down payment. The Fourth Department reversed, holding that the buyer’s unilateral rescission of the contract for the sale of real property constituted an anticipatory breach, entitling the sellers to retain the down payment. The court endorsed a judgment in favor of the sellers representing the difference between the contract price and the resale price, while observing that the buyer had “not controverted the claim of damages asserted by the seller” (id. at 954).

The Fourth Department in Ryan v Corbett (52 AD3d 1270 [4th Dept 2008]) agreed with the buyer that the trial court had erred by relying on Di Scipio when assessing the amount of the sellers’ damages caused by the buyer’s breach of the parties’ contract of purchase and sale. In sum, “[b]ecause there was a subsequent sale of the [sellers’] residence, the court in reliance on Di Scipio did not consider evidence of the market value of the property at the time of the breach, and it awarded [the sellers] the difference between the contract price and the price received upon the subsequent sale of the property” (id. at 1270). Instead, the Fourth Department agreed with the Third Department’s decisions in Matzkowitz and Webster. But although “agreeing] with [the seller] that the [trial judge] erred in failing to consider the testimony of her expert appraiser with respect to the fair market value at the time of the breach,” the court “nevertheless conclude[d], upon [its] independent review of the record, that the expert’s testimony did not establish ‘that the fair market value at the time of the breach [was] otherwise^]’ i.e., it did not outweigh the evidence of value established by the subsequent sale of the property” (id. at 1271 [citation omitted], quoting Matzkowitz, 195 AD2d at 842).

¡II

We reject the Farrells’ invitation to put aside settled law and adopt a new rule whereby a seller’s damages for a buyer’s breach of a contract to sell real property is the difference between the contract price and the resale price (assuming, of course, the property is resold in an arm’s length transaction sometime before the conclusion of the lawsuit for breach of contract). The time-of-the-breach rule is longstanding in New York, as illustrated by the preceding Cook’s tour of appellate decisions from throughout the State and as early as 1916; “seems to be the rule everywhere” in the United States (see Calamari & Perillo, supra at 495); and is consistent with the general contract principles that damages “are properly ascertained as of the date of the breach,” and “the injured party has a duty to mitigate” (see Brushton-Moira Cent. School Dist. v Thomas Assoc., 91 NY2d 256, 262-263 [1998] [measuring damages for breach of a construction contract from the date of the breach rather than from the date of the damages trial held 13 years later]). This is not to say that resale price is irrelevant to the determination of damages; in fact, the resale price, in a particular case, may be very strong evidence of fair market value at the time of the breach. This is especially true where the time interval between default and resale is not too long, market conditions remain substantially similar, and the contract terms are comparable (cf. e.g. Procopis, discussed earlier).

In the view of the concurring judges, the “better rule” for calculating a seller’s damages when a buyer breaches a contract to sell real property “is found in the Uniform Land Transactions Act” (ULTA) (see concurring op at 502). The relevant provision states that the wronged seller “may resell the real estate . . . and recover any amount by which the unpaid contract price . . . exceeds the resale price, less expenses avoided because of the buyer’s breach” (ULTA [1975] § 2-504 [a]). Initially approved by the National Conference of Commissioners on Uniform State Laws (the National Conference) in 1975 and intended to be the Uniform Commercial Code of real estate law, ULTA was something of a flop. It was never adopted by any state, and was withdrawn by the National Conference in 1990 (see Brown, Whatever Happened to the Uniform Land Transactions Act?, 20 Nova L Rev 1017, 1018 [1996]). Further, ULTA’s measure-of-damages rule for a buyer’s breach appears to have been adopted judicially by only a single intermediate appellate court some 20 years ago (see Kuhn v Spatial Design, Inc., 245 NJ Super 378, 585 A2d 967 [Super Ct, App Div 1991] [where the buyer breaches a contract to purchase real estate, the seller may recover the difference between the contract price and the resale price and any incidental and consequential damages, less expenses avoided as a result of the breach]). This is not surprising, as the ULTA rule is not conspicuously fairer or easier to apply than the time-of-the-breach rule. And as we noted in Maxton Bldrs. v Lo Galbo (68 NY2d 373 [1986]), where we reaffirmed a seller’s right to retain the down payment when the buyer in a real estate transaction wrongly fails to perform, adherence to tradition is

“particularly apt in cases involving the legal effect of contractual relations. In fact, when contractual rights are at issue, ‘where it can reasonably be assumed that settled rules are necessary and necessarily relied upon, stability and adherence to precedent are generally more important than a better or even a “correct” rule of law’ ” (id. at 381, quoting Matter of Eckart, 39 NY2d 493, 500 [1976]; see also People v Damiano, 87 NY2d 477, 488, 489 [1996, Simons, J., concurring] [“common-law decisions should stand as precedents for guidance in cases arising in the future” for substantial reasons of stability and legitimacy, subject to “reexamination if there is some evidence that the policy concerns underlying them are outdated or if (existing rules) have proved unworkable”]).

W

Here, the Farrells contend that Ms. Roche’s opinion as to the value of their property on the date of the breach (which is October 24, 2005, given the facts) is not entitled to any weight; contrariwise, the Whites maintain that Ms. Roche’s opinion is conclusive as a matter of law, which is how Supreme Court seems to have treated it. Ms. Roche’s deposition testimony does not lack factual support, as the Farrells protest: she is an experienced broker in the Skaneateles area; she explained the factors she considered to come up with $1,725 million as the property’s listing price and fair market value, including what the Farrells paid for the property in 2002 (she was the seller’s broker at the time), the cost of the improvements they subsequently made, and the size and lake frontage of other properties selling in the $1.5 to $3 million range in 2005 and 2006 (although she did not describe or discuss the property the Whites actually bought for $1.7 million in August 2005). But fair market value is a question of fact, and in this case there was evidence contradicting Ms. Roche’s testimony, including the property’s substantially lower eventual sale price. As a result, neither party was entitled to the summary judgment both sought and the Whites successfully secured in Supreme Court. Notably, in the Appellate Division decisions discussed earlier the trial judges determined damages only after a trial or inquest. On remittal, the judge in this case will need to consider at least the following factors relevant to damages: whether, or the degree to which, the property’s resale in January 2007 for $1,376,550 reflects fair market value as of October 2005, given the lapse of time (about 14 months) and any differences in market conditions and contract terms; whether the Farrells made sufficient efforts to mitigate (i.e., to resell at a reasonable price after the Whites’ default), which is relevant to any weight to be given the resale price as a measure of fair market value at the time of the breach; and the cost to remedy the property’s drainage deficiencies, which, like the cost to complete several other specified tasks and the $10,000 credit—all agreed to by the parties in the contract addendum—should be subtracted from $1,725 million (the original contract price) in order to establish the contract price to be compared to the property’s fair market value in October 2005.

Accordingly, the order of the Appellate Division should be modified, without costs, by remitting to Supreme Court for further proceedings in accordance with this opinion, and, as so modified, affirmed.

Pigott, J. (concurring).

I concur in the result reached by the majority, but I disagree with its rationale because, in my view, the majority is blurring an important distinction between the measure of damages for breach of real estate contracts and the measure of damages in other sales.

Real property is and has always been treated differently from other sales, mainly because real property, by its very nature, is unique (see 1-3 Warren’s Weed, New York Real Property § 3.01 [1] [f]). There is no dispute here that the buyers breached the contract. The sellers should therefore recover the benefit of their bargain from the buyers. In this case, that may very well be $348,450, the difference between the contract price and the subsequent sale price, subject, of course, to any evidence proffered by the buyers that the sellers failed to act with due diligence to mitigate their claimed loss. Any other measure is a fiction. To flatly suggest, as the majority does, that the measure should be “fair market value” at the time of the breach would almost always mean the actual contract price, for the simple reason that a willing seller and willing buyer had established that price at arm’s length. The end result is that a seller will rarely be damaged by a purchaser’s breach for any reason.

Under the majority’s rule, it is the innocent sellers, and not the breaching buyers, who must bear the cost of the buyers’ breach. In my view, the better rule is found in the Uniform Land Transactions Act:

“If a buyer wrongfully rejects, or otherwise commits a material breach, or repudiates as to a substantial part of the contract . . . , the seller may resell the real estate . . . and recover any amount by which the unpaid contract price . . . exceeds the resale price, less expenses avoided because of the buyer’s breach” (Uniform Land Transactions Act [ULTA] [1975] § 2-504 [a]).

Not only does this rule recognize the unique character of real estate transactions and provide some certainty for the non-breaching seller, it also places the risk where it properly belongs, i.e. on the breaching buyer. This rule is not one-sided, affording protection to the breaching buyer should the seller be fortunate enough to resell the property at the same or a higher price (see ULTA § 2-504 [f] [stating that the seller will not be “accountable to the buyer for any profit made on any resale”]).

The nonbreaching sellers are entitled to the benefit of their bargain, and that benefit should not be denied by the application of a rule that fails to take that basic tenet into account. The cases cited by the majority in support of the “time-of-the-breach” rule appear to apply the rule by rote (majority op at 495-499), detached from the reality of realty by failing to consider the legal consequence of an axiom that is harmful to the nonbreaching party.

The majority ultimately supports its adoption of the “time-of-the-breach” rule—which is common in contract law and in the Uniform Commercial Code where the parties are dealing in common activities or fungible goods—by relying primarily on a case involving a school district’s cause of action seeking the cost of replacing or repairing defective window panels that had been installed in its building (see Brushton-Moira Cent. School Dist. v Thomas Assoc., 91 NY2d 256 [1998]). There, the Court, applying general, black letter law, stated that “damages for breach of contract are ordinarily ascertained as of the date of the breach” (id. at 261 [citations omitted]).

But real property, unlike window panels, is not fungible. While there are usually extensive and active markets for fungible goods, thereby making it relatively less difficult for the seller to mitigate or cover in the event of a breach, the sale of real estate is clearly different because each parcel is unique (see Alba v Kaufmann, 27 AD3d 816, 818 [3d Dept 2006]; EMF Gen. Contr. Corp. v Bisbee, 6 AD3d 45 [1st Dept 2004], lv denied 3 NY3d 607 [2004]). As a result, the pool of buyers is plainly smaller for real estate than goods, and when a buyer breaches a real estate purchase agreement, the seller must then commence the sale process anew, which may require a reassessment of the list price and more showings of the property to new buyers, who may or may not find the property’s location, amenities or architectural style desirable. This may take a substantial amount of time and effort on the seller’s part, and the seller’s efforts may not readily succeed, because once the house has been on the market for a significant period of time, the market may have declined or prospective purchasers may be wary of the amount of time the house has been on the market, leading them to conclude that the property is tainted in some fashion. Meanwhile, under our holding today, the breaching buyer will walk away indifferent to the hardship caused to the seller by his conduct.

The majority agrees that “the resale price, in a particular case, may be very strong evidence of fair market value at the time of the breach,” especially if “the time interval between default and resale is not too long, market conditions remain substantially similar, and the contract terms are comparable” (majority op at 499 [emphasis added]). There is no dispute that the general rule is that damages are measured by the fair market value at the time of the breach; the issue here is whether that measure, in cases where the property is later sold with reasonable diligence and in good faith, is adequate or even realistic. In such a circumstance, why should the nonbreaching seller suffer the consequences of the buyer’s breach? If market conditions decline, shouldn’t the loss be laid squarely at the feet of the breaching buyer, particularly where the seller is able to make a colorable claim at trial in that regard?

The majority also holds that the trial court in this case will need to consider, among other things, whether the sellers “made sufficient efforts to mitigate” (majority op at 501), but mitigation is irrelevant under the majority’s rule since the only calculation that matters is the difference between the fair market value at the time of the breach and the contract price. Under the ULTA rule proposed by this concurrence, the seller’s mitigation is very relevant, and would constitute a valid defense by a breaching purchaser on the issue of damages once the non-breaching seller has made a prima facie case for breach of contract and entitlement to damages. Applying that rule here, there is a question of fact as to whether the sellers mitigated their damages subsequent to the buyers’ breach and whether the sale in March 2007 for $1,376,550 represented the fair market value of the property.

Although the majority correctly concludes that there are questions of fact, it is my view that the trial court should follow the above rule in assessing the true nature of the damages incurred by the sellers.

Chief Judge Lippman and Judges Graffeo and Rivera concur with Judge Read; Judge Pigott concurs in the result in an opinion in which Judge Smith concurs.

Order modified, without costs, by remitting to Supreme Court, Onondaga County, for further proceedings in accordance with the opinion herein, and, as so modified, affirmed.

      . We agree with the Whites that any question of whether, or to what extent, the Farrells were entitled to recover consequential damages is not properly before us (see Clifford R. Gray, Inc. v City School Dist. of Albany, 277 AD2d 843, 846-847 [3d Dept 2000]; City of Mount Vernon v Mount Vernon Hous. Auth., 235 AD2d 516, 516-517 [2d Dept 1997]).

      . In Maxtor, the defaulting buyer failed to persuade us to replace our traditional rule with a “modern rule” permitting recovery for part performance in excess of the seller’s actual damages, with the burden on the buyer to prove the net benefit conferred (68 NY2d at 379-380). Because in New York it is “axiomatic [that] a ‘vendee who defaults on a real estate contract without lawful excuse[ ] cannot recover the down payment’ ” (see Cipriano v Glen Cove Lodge #1458, B.P.O.E., 1 NY3d 53, 62 [2003], quoting Maxton, 68 NY2d at 378), it may well be that, in most instances where the buyer breaches a contract to sell real estate, the seller simply retains the down payment without resorting to the expense and uncertainty of litigating actual harm.

      . Any damages awarded would, of course, be less the $25,000 down payment.

      . Although this provision also states that a buyer may also recover incidental and consequential damages, whether or not the sellers here are entitled to such damages is not before us.

      . Uniform Commercial Code § 2-725.


author: Chief Judge Lippman.

text:
    [986 NE2d 903, 964 NYS2d 69]
    Paul Marinaccio, Sr., Respondent, v Town of Clarence, Defendant, and Kieffer Enterprises, Inc., Appellant.
    Argued February 5, 2013;
    decided March 21, 2013

      POINTS OF COUNSEL

      Phillips Lytle LLP, Buffalo (Michael B. Powers and Patricia A. Mancabelli of counsel), for appellant.
    I. Plaintiff offered no proof of willful, wanton or malicious conduct by Kieffer Enterprises, Inc. (Rocanova v Equitable Life Assur. Socy. of U.S., 83 NY2d 603; Laurie Marie M. v Jeffrey T.M., 159 AD2d 52, 77 NY2d 981; Sharapata v Town oflslip, 56 NY2d 332; New York Univ. v Continental Ins. Co., 87 NY2d 308; Cantillo v Geer, 185 AD2d 192; Prozeralik v Capital Cities Communications, 82 NY2d 466; Ross v Louise Wise Servs., Inc., 8 NY3d 478; Nickerson v Te Winkle, 161 AD2d 1123; Garricks v City of New York, 1 NY3d 22; McCann v McCann, 110 AD2d 1069.) II. The trial court’s preclusion of the easement and the Appellate Division’s holding that this preclusion was “irrelevant” constitute reversible error. (Witter v Taggart, 78 NY2d 234; Green Bus Lines v Consolidated Mut. Ins. Co., 74 AD2d 136; Nunn v GTE Sylvania, 251 AD2d 1089; Perry v Town of Geneva, 64 AD3d 1225; Matter of Siwek v Mahoney, 39 NY2d 159; Trefoil Capital Corp. v Creed Taylor, Inc., 121 AD2d 874; Harbor Hills Landowners v Manelski, 65 Misc 2d 682; Prego v Gutchess, 61 AD3d 1394.) III. The trial court’s allowance of plaintiffs untruthful testimony and plaintiffs counsel’s improper argument after the trial court ordered that no one mention the easement was reversible error. (Matter of New York Diet Drug Litig., 47 AD3d 586; Shouse v Lyons, 4 AD3d 821; Pizzi v Anzalone, 261 AD2d 374; Peterson v Melchiona, 269 AD2d 375; Bromberg v City of New York, 25 AD2d 885.) IV The trial court erroneously precluded the defense expert’s damages testimony. (Collins v Greater N.Y. Sav. Bank, 194 AD2d 514; Fine Ornaments v Esplanade Gardens, 248 AD2d 287; Bliss v Consolidated Edison Co. of N.Y., Inc., 28 Misc 3d 1215[A], 2010 NY Slip Op 51364[U]; Williams v Way, 289 AD2d 483; Amherst Synagogue v Schuele Paint Co., Inc., 30 AD3d 1055; Kane v Shapiro, Rosenbaum, Liebschutz, & Nelson, L.L.P.,
      57 AD3d 1513; Petracca v Petracca, 305 AD2d 568; Baez v Sugrue, 300 AD2d 519; Law v Moskowitz, 279 AD2d 844; Gordon v Hancock, 292 AD2d 858.) V. Instructing the jury to ignore proof of Kieffer Enterprises, Inc.’s reliance upon his engineers and sound engineering practices was error. (Nickerson v Te Winkle, 161 AD2d 1123; Garricks v City of New York, 1 NY3d 22; McCann v McCann, 110 AD2d 1069; Liberty Drug Co. v Bell Maintenance Co., 16 AD2d 809; Kerhonkson Lodge v State of New York, 4 AD2d 575.) VI. The trial court erroneously directed the jury to disregard proof that plaintiff caused his own flooding. (Mirand v City of New York, 84 NY2d 44; Finnegan v Brothman, 270 AD2d 808; Clark v City of Rochester, 25 AD2d 713; Nickerson v Te Winkle, 161 AD2d 1123; Levine v Abergel, 127 AD2d 822; Kiff v Youmans, 86 NY 324.)

      Lipsitz Green Scime Cambria LLP, Buffalo (Joseph J. Manna and Kenneth E. Webster of counsel), for respondent.
    I. The punitive damages award should be affirmed because it is supported by legally sufficient evidence under the charge that was read to the jury without Kieffer Enterprises, Inc.’s objection. (Cohen v Hallmark Cards, 45 NY2d 493; Brown v Du Frey, 1 NY2d 190; Harris v Armstrong, 64 NY2d 700; Titlebaum v Loblaws, Inc., 75 AD2d 985.) II. The easement affirmative defense was properly precluded. (Braman v Rochester Gas & Elec. Corp., 54 AD2d 174; Keinz v Niagara Mohawk Power Corp., 41 AD2d 431; Chlystun v Kent, 185 AD2d 525; Branower & Son, Inc. v Waldes, 173 App Div 676; Aikens Constr. of Rome v Simons, 284 AD2d 946; St. Lawrence Explosives Corp. v Law Bros. Contr. Corp., 170 AD2d 957; Schoenborn v Kinderhill Corp., 98 AD2d 831; Hawley v Travelers Indem. Co., 90 AD2d 684; Halmar Distribs. v Approved Mfg. Corp., 49 AD2d 841; Wrobleski v Wakefield Homes, 46 AD2d 805.) III. No easement exists. IV The belated easement defense would not have impacted the punitive damages verdict. (Western N.Y. Land Conservancy, Inc. v Cullen, 66 AD3d 1461.) V. There was no fraud. (Baylis v Wood, 246 App Div 779; Matter of Selle [Lubin], 286 App Div 1058; Leszczynski v Pennsylvania R.R. Co., 274 App Div 1003; Griffin v Griffin, 231 App Div 819; Joyce v Katzberg, 213 App Div 883; Scholing v O’Conner, 209 App Div 839; Jamaica Estates v Smith, 177 App Div 882; Matter of Reynolds, 23 AD2d 623.) VI. The court properly excluded the Town of Clarence’s proposed expert. (Matter of Daubman v Nassau County Civ. Serv. Commn., 195 AD2d 602; Cahill v Harter, 277 AD2d 655; Puderbaugh v State Empls. Fed. Credit Union, 276 AD2d 992; Fleet Bank v Powerhouse Trading Corp., 267 AD2d 276; Kadan v Volkswagen of Am., 111 AD2d 540; Oram v Capone, 206 AD2d 839; Telaro v Telaro, 25 NY2d 433; Ryan v St. Francis Hosp., 62 AD3d 857; Marwin v Top Notch Constr. Corp., 50 AD3d 977; Lucian v Schwartz, 55 AD3d 687.) VII. Kieffer Enterprises, Inc.’s objections are waived and unpreserved because it did not object to the court’s instruction to the jury. (Beltz v City of Buffalo, 61 NY2d 698; Brown v Concord Nurseries, Inc., 53 AD3d 1067; Fitzpatrick & Weller, Inc. v Miller, 21 AD3d 1374; Harris v Armstrong, 64 NY2d 700; Kerhonkson Lodge v State of New York, 4 AD2d 575; Noonan v City of Albany, 79 NY 470; Keller v State of New York, 19 Misc 2d 794; Holmes v State of New York, 32 Misc 2d 1077.)
   OPINION OF THE COURT

Chief Judge Lippman.

The question presented by this case is whether the evidence was sufficient to find defendant liable for punitive damages for intentional diversion of storm water onto plaintiffs property, which caused extensive damage to his land, constituting the torts of trespass and nuisance. We find that although the injury was considerable and the tortious acts undeniably intentional, the evidence in this case was insufficient for an award of punitive damages.

Plaintiff Paul Marinaccio and defendant Kieffer Enterprises, Inc. (KEI) are adjoining landowners in the Town of Clarence, Erie County (Town). KEI was a small residential real estate company, operated by 82-year-old Bernard Kieffer. KEI sought to develop the second and third phases of a residential subdivision on his land called “Lexington Woods” and began the process of planning. KEI submitted a plan to the Town for its approval. The approved plan required that water from the west side of the development would flow into a storm sewer and then into a ditch, which was to create a mitigation pond on the northeast section of Lexington Woods. According to the Town Engineer, the ditch was on KEI’s property. But as the Town later discovered, this ditch was actually located on plaintiffs property, and it was used without plaintiffs permission.

KEI also should have known that this ditch did not have the capacity to contain the large amount of water that KEI diverted. Worse, KEI’s design of the mitigation pond bordering plaintiffs property, the purpose of which was to retain water and prevent it from discharging downstream, was insufficient in size to handle the flow of water from the surrounding area. To address the problem, KEI installed two drainage pipes and routed the quickly rising water into an abandoned farmer’s furrow located on plaintiffs land, again, without plaintiffs permission, resulting in over 30 acres of flooded wetland.

This newly created wetland caused mosquitos to breed and frogs to gather on plaintiffs property, about which plaintiff is particularly phobic. Consequently, plaintiff had problems traversing his property without the assistance of his family and friends, whom plaintiff would often call on to remove frogs from his driveway and near the door of his home.

Plaintiff personally contacted Bernard Kieffer about the flooding, but was told that the flooding was “[not] his problem.” Plaintiffs counsel also sent a letter to Mr. Kieffer, demanding assistance cleaning up the flooding, to which he received no response. However, according to KEI, plaintiff refused to allow the Town to clean out the ditch on his property, which would have significantly alleviated the flooding by allowing water to move through it more easily. In fact, when the Town arrived to clean the ditch, plaintiff became enraged and would not allow the Highway Superintendent, or any of the Town’s workers to enter his property. Thereafter, the Town Engineer met with plaintiff to discuss the Town’s assistance with other remedial efforts, but according to the Town and KEI, plaintiff again became enraged and ordered him to leave. The Town admittedly made no further efforts to clean the ditch.

Plaintiff commenced this action against KEI and the Town alleging, among other things, trespass and nuisance and seeking money damages for alleged intentional diversion of water onto his property. KEI moved, at the close of proof, to dismiss the punitive damages claim against it based on insufficiency of the evidence. The trial court denied that motion. The jury returned a verdict of $1,313,600 for plaintiff against the Town for compensatory damages. The jury also awarded plaintiff $328,400 in compensatory damages and $250,000 in punitive damages against KEI.

Following the denial of KEI’s and the Town’s posttrial motions, the parties settled all but the punitive damages claim. KEI appealed that part of Supreme Court’s judgment against it which awarded $250,000 in punitive damages plus interest. The Appellate Division affirmed (90 AD3d 1599 [4th Dept 2011]). The majority characterized KEI’s argument as “a contention that the award of punitive damages is not supported by legally sufficient evidence” {id. at 1600) and concluded that a valid line of reasoning did exist to support “the jury’s conclusion that KEI’s conduct was sufficiently egregious to warrant an award of punitive damages” (id.).

Two Justices dissented on the basis that “insufficient evidence [existed] in this record that KEI was motivated by maliciousness or vindictiveness or that KEI engaged in such ‘outrageous or oppressive intentional misconduct’ to warrant a punitive damages award” (id. at 1604). For the reasons expressed below, we now vacate the award of punitive damages.

Because the standard for imposing punitive damages is a strict one and punitive damages will be awarded only in exceptional cases, the conduct justifying such an award must manifest “spite or malice, or a fraudulent or evil motive on the part of the defendant, or such a conscious and deliberate disregard of the interests of others that the conduct may be called wilful or wanton” (Dupree v Giugliano, 20 NY3d 921, 924 [2012] [citation and internal quotation marks omitted]). As conceded by plaintiff, the trial court correctly charged the jury that punitive damages may only be awarded if defendant’s acts were, “wanton and reckless or malicious. Punitive damages may be awarded for conduct that represents a high degree of immorality and shows such wanton dishonesty as to imply a criminal indifference to civil obligations.”

Plaintiff argues that KEI willfully and wantonly caused danger to the health, safety and welfare of the public because of the flooding. But the intent plaintiff would impute to KEI’s actions cannot find support in the record. The facts in evidence do not demonstrate that KEI’s actions “implied] a criminal indifference to civil obligations.” Defendant complied with all federal, state and local planning and development laws and regulations, and worked closely with the US Army Corps of Engineers, the Town Engineer and the Town Planner to secure all required permits and approvals; it hired a wetlands expert, an engineering expert, and soil expert to assist in those regards. Clearly, those measures were ultimately unsuccessful in preventing damage to surrounding property. However, this planning, if not indicative of good faith, at least shows that KEI’s actions could not be considered “wanton and reckless or malicious.”

Certainly the Town and KEI’s dealings with plaintiff and his property were not ideal, and both defendants have been held liable for compensatory damages for their transgressions. Defendants knew that overflow would be a problem along the furrow bordering plaintiffs property, and the Town told KEI that it would contact plaintiff regarding an easement along his west property line. Although it is undisputed that the Town did not obtain plaintiffs permission to allow water to flow onto his property, it does not follow that the acts resulting in overflow onto plaintiffs property were undertaken with the requisite malice or gross indifference. KEI failed to ensure that the Town followed through with its plan to obtain an easement, so that they were liable in nuisance and trespass, but “[sjomething more than the mere commission of a tort is always required for punitive damages” (Prozeralik v Capital Cities Communications, 82 NY2d 466, 479 [1993] [internal quotation marks and citation omitted]). Punitive damages are permitted only when a defendant purposefully causes, or is grossly indifferent to causing, injury and defendant’s behavior cannot be said to be merely volitional; an unmotivated, unintentional or even accidental result of a legally intentional act cannot, alone, qualify (see Hartford Acc. & Indem. Co. v Village of Hempstead, 48 NY2d 218, 227-228 [1979]). Punitive damages are awarded to punish and deter behavior involving moral turpitude (see Ross v Louise Wise Servs., Inc., 8 NY3d 478, 489 [2007]). Here, KEI’s behavior does not rise to that level.

Accordingly, the order of the Appellate Division should be reversed, with costs, and that part of the judgment awarding punitive damages vacated.

Judges Graffeo, Read, Smith and Pigott concur; Judge Rivera taking no part.

Order reversed, with costs, and that part of the judgment awarding punitive damages vacated.


author: Graffeo, J.

text:
    [986 NE2d 907, 964 NYS2d 73]
    The People of the State of New York, Respondent, v Demetrius McGee, Appellant.
    Argued February 5, 2013;
    decided March 21, 2013

      POINTS OF COUNSEL

      Barbara J. Davies, Chief Attorney, Legal Aid Bureau of Buffalo, Buffalo (Karen C. Russo-McLaughlin and David C. Schopp of counsel), for appellant.
    I. Because the proof was insufficient as a matter of law to sustain his convictions of attempted murder in the first degree and reckless endangerment in the first degree appellant was deprived of his constitutional rights to a fair trial and due process under the law. (Jackson v Virginia, 443 US 307; In re Winship, 397 US 358; Braxton v United States, 500 US 344; United States v Fernandez-Antonia, 278 F3d 150; People v Acosta, 80 NY2d 665; People v Rizzo, 246 NY 334; People v Kassebaum, 95 NY2d 611; People v Mahboubian, 74 NY2d 174; People v Bracey, 41 NY2d 296; People v Sullivan, 173 NY 122.) II. Appellant was denied his constitutional right to the effective assistance of counsel, requiring the reversal of his conviction. (People v Baldi, 54 NY2d 137; People v Benevento, 91 NY2d 708; People v Hobot, 84 NY2d 1021; People v Caban, 5 NY3d 143; People v Turner, 5 NY3d 476; People v Cabassa, 79 NY2d 722; People v Lane, 60 NY2d 748; People v Hunter, 35 AD3d 1228; People v Chrysler, 233 AD2d 928; People v Santana, 156 AD2d 736.)

      Frank A. Sedita, III, District Attorney, Buffalo (Michael J. Hillery and Donna A. Milling of counsel), for respondent.
    I. The verdict rested on legally sufficient evidence. (People v Acosta, 80 NY2d 665; People v Steinberg, 79 NY2d 673; People v Rizzo, 246 NY 334; People v Butts, 72 NY2d 746; People v La Belle, 18 NY2d 405; People v Borrero, 26 NY2d 430; People v Lipsky, 57 NY2d 560.) II. Defendant received effective assistance of counsel. (People v Benevento, 91 NY2d 708; People v Stultz, 2 NY3d 277.)
   OPINION OF THE COURT

Graffeo, J.

According to the proof presented at trial, viewed in the light most favorable to the People, defendant Demetrius McGee drove a Chevy Equinox down Cambridge Street in Buffalo while codefendant Mychal Carr fired shots toward civilians, cars and homes from the front passenger window of the vehicle. Law enforcement personnel immediately responded to the scene and, rather than surrendering, defendant led multiple police vehicles on a high-speed chase through the city. At one point during the pursuit, Officer Ron Clark nearly caught up to the Equinox. When Clark was within one car length, defendant suddenly swerved into the oncoming lane of traffic in a manner that gave Carr a clearer shot at the police officer. Carr leaned out the front passenger window and fired two or three shots at Clark but the shots missed; one bullet ricocheted off the rear driver’s side door of the patrol car. As Carr slipped back into the Equinox, Clark saw that he was holding a silver handgun. Officer Clark lost sight of the Equinox as it sped away. A few minutes later the Equinox was found abandoned and both defendant and Carr were apprehended attempting to flee the area on foot. A silver handgun bearing DNA evidence linking it to Carr was found nearby. Remarkably, no one was injured during the initial incident or the car chase.

At the joint trial of defendant and Carr, both men were convicted on an accomplice theory of reckless endangerment in the first degree for the Cambridge Street shootings and attempted murder in the first degree for the shots fired at Officer Clark. On appeal, defendant argued that the indictment should be dismissed because the evidence presented at trial was legally insufficient and, alternatively, that he was entitled to reversal of his conviction and a new trial based on the ineffective assistance of trial counsel. The Appellate Division rejected these contentions (87 AD3d 1400 [4th Dept 2011]), as do we.

Repeating the argument he made in his motion to dismiss at trial, defendant asserts that the evidence was insufficient to support the conviction because the only proof connecting him to the car chase was a spontaneous statement he made after being apprehended that he was “just the driver” of the vehicle. Claiming that this statement was uncorroborated, defendant maintains that reversal of the conviction and dismissal of the indictment was required pursuant to CPL 60.50. That statute precludes a person from being convicted of a crime based solely on a confession unless it is corroborated “with[ ] additional proof that the offense charged has been committed.” The purpose of this requirement is to “avert the danger that a crime may have been confessed when no crime in any degree has been committed by anyone” (People v Chico, 90 NY2d 585, 590 [1997] [internal quotation marks and citation omitted]). Accordingly, CPL 60.50 “does not mandate submission of independent evidence of every component of the crime charged” but merely requires “some proof, of whatever weight, that a crime was committed by someone” (id. at 589 [citation omitted]).

Here, there was ample independent evidence that a crime was committed since a civilian eyewitness testified about the Cambridge Street shooting incident, several police officers recounted the events relating to the car chase and Officer Clark described the firing of shots at his vehicle. Nor was defendant’s statement the only evidence connecting him to the crime—a police officer identified defendant at trial as the driver of the Equinox and defendant was arrested not far from the abandoned vehicle while attempting to flee the area.

On appeal, defendant raises several other challenges to the sufficiency of the evidence that were not presented to the trial court, arguing that his attorney was constitutionally deficient for failing to move to dismiss the indictment based on these claims. Given that defendant alleges that his trial counsel rendered ineffective assistance, we begin by noting that defendant’s attorney mounted a vigorous defense, ably arguing motions such as a Sandoval application, actively participating in the voir dire of prospective jurors, making a cogent opening statement, cross-examining the People’s witnesses, lodging appropriate objections and offering an articulate closing argument that marshaled the evidence and pointed out weaknesses in the People’s proof for the benefit of defendant. That being said, we have recognized that a failure to make a significant argument may, in a rare case, result in a finding of constitutionally deficient representation, despite an attorney’s otherwise adequate performance, “but only when the error is sufficiently egregious and prejudicial as to compromise a defendant’s right to a fair trial” (People v Caban, 5 NY3d 143, 152 [2005] [citations omitted]; see People v Turner, 5 NY3d 476 [2005]). To rise to that level, the omission must typically involve an issue that is so clear-cut and dispositive that no reasonable defense counsel would have failed to assert it, and it must be evident that the decision to forgo the contention could not have been grounded in a legitimate trial strategy. For example, “[i]n Turner, we determined that defendant had a meritorious record-based ineffective assistance of counsel claim because defense counsel had objected to the submission of a lesser-included offense but had neglected to raise a clear-cut and completely dispositive statute of limitations defense relating to that charge” (People v Brunner, 16 NY3d 820, 821 [2011] [internal quotation marks omitted], citing Turner, 5 NY3d at 481).

In this case, defense counsel was not ineffective for failing to raise the sufficiency arguments identified on appeal because they are not fairly characterized as clear-cut and dispositive in defendant’s favor (see Brunner, 16 NY3d 820 [it was not ineffective for counsel to fail to make GPL 30.30 motion where there was negative precedent and the applicability of various exclusions was debatable]; People v Borrell, 12 NY3d 365, 369 [2009] [counsel was not ineffective for failing to raise issue of “uncertain efficacy”]). To the contrary, the contentions highlighted on appeal are of dubious efficacy as is evident from precedent existing at the time of trial. Defendant claims that trial counsel should have argued that the proof was insufficient to support an inference that Carr—the shooter—intended to kill a police officer or that defendant shared Carr’s intent. But we rejected comparable sufficiency arguments in People v Cabassa (79 NY2d 722 [1992], cert denied sub nom. Lind v New York, 506 US 1011 [1992]), a similar case that also involved a high-speed chase in which a passenger shot at the police who were following behind and defendant driver claimed there was insufficient evidence either of an intent to kill or a shared community of purpose between he and the shooter.

Likewise, the contention that trial counsel should have asserted a lack of sufficient evidence that defendants’ actions rose to the level of an attempt, necessary to support the attempted first-degree murder conviction, also does not meet the Turner standard. To constitute an attempt, conduct must come dangerously near commission of the completed crime (see People v Kassebaum, 95 NY2d 611, 618 [2001], cert denied 532 US 1069 [2001]; see Penal Law § 110.00). In a decision issued prior to the trial of this case, we held that the evidence was sufficient to support attempted murder and attempted burglary convictions where a defendant who had been stalking a woman was arrested outside her home with a shotgun, having compiled a “to do” list memorializing a plan to break into the home and shoot the woman and her husband in front of their children (People v Naradzay, 11 NY3d 460 [2008]). Given this precedent, defense counsel cannot be assailed for neglecting to challenge the adequacy of the attempt evidence here since Carr actually fired two to three rounds of ammunition at Officer Clark when the two vehicles were within close proximity of each other.

To the extent that the record permits us to review defendant’s remaining ineffective assistance of counsel contentions in this direct appeal, we have considered them and find them to be similarly unavailing. For example, there may have been a strategic reason for counsel’s failure to request that the court charge attempted assault as a lesser included offense of the attempted murder count. In prior cases, we have recognized that the decision to request or consent to the submission of a lesser included offense is often based on strategic considerations, taking into account a myriad of factors, including the strength of the People’s case. As we have noted, “[a] defendant who thinks his chances of acquittal are small may welcome giving the jury an opportunity for a compromise verdict” and therefore may not object when the People seek the submission of a lesser included offense (Turner, 5 NY3d at 483-484). Conversely, where the proof against a defendant is relatively weak and the charges very serious, a defendant may elect not to request a lesser included offense so that the jury is forced to choose between conviction of a serious crime or an acquittal, with the hope that the jury will be sympathetic to defendant and uncomfortable convicting on scant evidence.

From the defense perspective, this case presented a variation on the latter scenario since a defendant with an arguably less active role was tried jointly with a codefendant more directly involved in the attempted murder. In a situation like this, the more passive defendant may be portrayed as less culpable than the codefendant, leading counsel to adopt a “go for broke” strategy that forces the jury to choose between convicting both defendants of the same serious offense despite their different roles—a result jurors may view as inequitable—or drawing a distinction between the two by convicting only the more active participant. Here, the defense at trial was that defendant was “just the driver” who was unarmed, never shot at anybody and did not intend to kill a police officer. This defense theory would appear to be consistent with a “go for broke” strategy on the attempted murder count.

For related reasons, we are unpersuaded by defendant’s ineffective assistance argument predicated on defense counsel’s failure to seek a severance of defendant’s trial from that of the codefendant. Not only is it highly unlikely that such a motion would have been granted but, even if the application had merit, we could not conclude on this record that there was no strategic basis for the omission. With Carr—the party who discharged the gun, as established by eyewitness accounts and DNA evidence—present in the courtroom, the jury had someone before it who was directly responsible for the attempt on Officer Clark’s life. Thus, the jury had the option of convicting Carr, thereby holding someone accountable, while at the same time extending leniency to defendant on the rationale that he was merely the driver of the Equinox. During his summation, defense counsel drew strong contrasts between defendant’s conduct and that of Carr, noting the relative weakness of the evidence against his client as compared to Carr. To be sure, the attempt to distance defendant from Carr’s acts failed since the jury convicted both men of attempted murder. But we have long recognized a distinction between an unsuccessful trial strategy and constitutionally deficient performance (see People v Benevento, 91 NY2d 708, 712 [1998] [“a reviewing court must avoid confusing true ineffectiveness with mere losing tactics and according undue significance to retrospective analysis”] [internal quotation marks and citation omitted]).

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

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

Order affirmed.


author: Pigott, J.

text:
    [986 NE2d 911, 964 NYS2d 77]
    In the Matter of David W. Howard, Respondent, v Stature Electric, Inc., et al., Appellants. Workers’ Compensation Board, Respondent.
    Argued February 5, 2013;
    decided March 21, 2013

      POINTS OF COUNSEL

      Susan B. Marris, Liverpool (Michael Miliano of counsel), for appellants.
    I. The Third Department erred when it distinguished an Alford guilty plea from a non-Alford guilty plea. (Matter of Silmon v Travis, 95 NY2d 470; People v Washington, 51 AD3d 1223; People v Hill, 16 NY3d 811; People v Tausinger, 21 AD3d 1181; People v Miller, 91 NY2d 372; Matter of State of New York v Mark S., 87 AD3d 73, 17 NY3d 714; Matter of Aaron H. [Barbara H.], 72 AD3d 1602; Matter of Feuereisen v Axelrod, 100 AD2d 675, 62 NY2d 605; Matter of Cumberland Pharmacy v Blum, 69 AD2d 903; Matter of Hopfl, 48 NY2d 859.) II. The Third Department erred when it found that Stature Electric, Inc. did not meet its burden of proving identity of issues. (City of New York v College Point Sports Assn., Inc., 61 AD3d 33; Olsson v MacDonald, 16 AD3d 1017; Merchants Mut. Ins. Co. v Arzillo, 98 AD2d 495; People v Aksoy, 84 NY2d 912; Matter of Losurdo v Asbestos Free, 1 NY3d 258; Matter of Bottieri v New York State Dept. of Taxation & Fin., 27 AD3d 1035; Matter of Dieter v Trigen-Cinergy Solutions of Rochester, 14 AD3d 748.)

      Christine Ann Scofield, Syracuse, for respondent.
    I. The Third Department did not commit reversible error by distinguishing an Alford guilty plea from a non-Alford guilty plea. (Merchants Mut. Ins. Co. v Arzillo, 98 AD2d 495; People v Serrano, 15 NY2d 304; Matter of Aaron H. [Barbara H.], 72 AD3d 1602.) II. The Third Department did not commit reversible error when it found that the State Insurance Fund did not meet its burden of proving identity of issues. (D’Arata v New York Cent. Mut. Fire Ins. Co., 75 NY2d 711.)
   OPINION OF THE COURT

Pigott, J.

The question presented on this appeal is whether claimant’s Alford plea should be given preclusive effect in a subsequent workers’ compensation proceeding. Because it cannot be said that the guilty plea necessarily resolved the issue raised in the workers’ compensation proceeding, preclusive effect should not be given.

In March 2003, claimant, David Howard, sustained a back injury while employed by respondent Stature Electric, Inc. He applied for and received workers’ compensation benefits. At a workers’ compensation hearing, when asked, claimant testified that he had no employment outside of his job with Stature Electric.

In November 2005, claimant was arrested and faced four charges: insurance fraud in the third degree (Penal Law § 176.20), grand larceny in the third degree (Penal Law § 155.35), offering a false instrument for filing in the first degree (Penal Law § 175.35), and a violation of Workers’ Compensation Law § 114, entitled “Penalties For Fraudulent Practices,” which defines various fraudulent acts under the Workers’ Compensation Law and classifies them as E felonies. Ultimately, claimant entered a plea of guilty to only one charge, insurance fraud in the fourth degree (Penal Law § 176.15), in satisfaction of all charges. He did so, according to the record, by entering an “Alford plea,” i.e., he was pleading guilty as defense counsel said, because of the “risks involved in going to trial” and “without an admission of [any] wrongdoing.” The court accepted his plea without any allocution as to the facts underlying it, and sentenced him to an agreed-upon conditional discharge, restitution of an unknown amount, and a certificate of relief from disabilities.

At a subsequent workers’ compensation hearing, the State Insurance Fund (SIF), Stature Electric’s workers’ compensation carrier, sought to preclude claimant from further benefits based upon the guilty plea. The Workers’ Compensation Law Judge denied the application on the ground that the plea “did not contain a factual allocution such that it could be determined that the plea matched the carrier’s claim of a violation of the Workers’ Compensation Law.” The Workers’ Compensation Board modified, by giving preclusive effect to Howard’s guilty plea and finding that Howard violated Workers’ Compensation Law § 114-a. The Appellate Division reversed and remitted for further proceedings, reasoning that “the requirement of identicality was not met and collateral estoppel does not apply” because, when claimant entered his Alford plea, he made no factual admissions and the transcript of the plea proceedings lacked any discussion of the factual basis for the charge (Matter of Howard v Stature Elec., Inc., 72 AD3d 1167, 1170 [3d Dept 2010]). We agree and therefore affirm the final Workers’ Compensation Board decision and the Appellate Division order brought up for review.

In New York, “Alford pleas are—and should be—rare” (Matter of Silmon v Travis, 95 NY2d 470, 474 [2000]). Such a plea is allowed only when, as in Alford itself, “it is the product of a voluntary and rational choice, and the record before the court contains strong evidence of actual guilt” (id. at 475). And we have said that “from the State’s perspective [.Alford pleas] are no different from other guilty pleas; it would otherwise be unconscionable for a court to sentence an individual to a term of imprisonment” (id.). Indeed, we have made clear that an Alford plea may generally be used for the same purposes as any other conviction and that, like any other guilty plea, it may be used as a predicate for civil and criminal penalties (id.).

Thus, as we would with any plea, we consider two factors when determining whether preclusive effect should be given: First, whether the identical issue was necessarily decided in the prior action or proceeding and is decisive of the present action, and second, whether the party who is attempting to relitigate the issue had a full and fair opportunity to contest it in the prior action or proceeding (see Kaufman v Eli Lilly & Co., 65 NY2d 449, 455 [1985]). Importantly,

“[t]he party seeking the benefit of collateral estoppel has the burden of demonstrating the identity of the issues in the present litigation and the prior determination, whereas the party attempting to defeat its application has the burden of establishing the absence of a full and fair opportunity to litigate the issue in the prior action” (id. at 456).

Here, the plea colloquy preceding claimant’s insurance fraud conviction included no reference to the facts underlying the conviction, so it is impossible to conclude that the conviction was based upon the same circumstances alleged to be fraudulent in the workers’ compensation proceeding. SIF therefore failed to meet its burden of proving identity of issue. As a result, the plea did not prohibit claimant from challenging the workers’ compensation violation alleged.

Accordingly, the decision of the Workers’ Compensation Board appealed from and the order of the Appellate Division brought up for review should be affirmed, with costs.

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

Decision of the Workers’ Compensation Board appealed from and order of the Appellate Division brought up for review affirmed, with costs.

        North Carolina v Alford, 400 US 25 (1970).