author: Graffeo, J.

text:
    [981 NE2d 240, 957 NYS2d 644]
    East Midtown Plaza Housing Company, Inc., Appellant, v Andrew M. Cuomo, as Attorney General of the State of New York, et al., Respondents. East Midtown Plaza Tenant-Cooperator Association, Intervenor-Appellant; East Midtown Plaza Mitchell-Lama Organization, Intervenor-Respondent.
    Argued October 10, 2012;
    decided November 19, 2012

      POINTS OF COUNSEL

      Sullivan & Worcester LLP, New York City (George O. Richardson, III, and Michael T. Sullivan of counsel), for appellant.
    I. East Midtown Plaza Housing Company, Inc. has the absolute right to exit the Mitchell-Lama program. (United Housing Foundation, Inc. v Forman, 421 US 837; Matter of KSLM-Columbus Apts., Inc. v New York State Div. of Hous. & Community Renewal, 5 NY3d 303; Matter of Verdell v Lincoln Amsterdam House, Inc., 27 AD3d 388; 2550 Olinville Ave. v Crotty, 149 Misc 2d 806, 185 AD2d 200, 81 NY2d 772; Matter of Columbus Park Corp. v Department of Hous. Preserv. & Dev. of City of N.Y., 80 NY2d 19.) II. The Martin Act does not apply to East Midtown Plaza Housing Company, Inc.’s exiting the Mitchell-Lama program. (Kralik v 239 E. 79th St. Owners Corp., 5 NY3d 54; People v Landes, 84 NY2d 655; Council for Owner Occupied Hous. v Abrams, 72 NY2d 553; Assured Guar. [UK] Ltd. v J.P. Morgan Inv. Mgt. Inc., 18 NY3d 341; United Housing Foundation, Inc. v Forman, 421 US 837; Isquith by Isquith v Caremark Intl., Inc., 136 F3d 531; Howe v Bank for Intl. Settlements, 194 F Supp 2d 6.) III. East Midtown Plaza Housing Company, Inc. properly counted the votes as one vote per share. (Guzman v Haven Plaza Hous. Dev. Fund Co., 69 NY2d 559; Matter of Acker v Berman, 54 Misc 2d 647.)

      Eric T. Schneiderman, Attorney General, New York City (Richard Dearing, Barbara D. Underwood and David Lawrence III of counsel), for State of New York, respondent.
    I. East Midtown Plaza Housing Company, Inc.’s proposed privatization is subject to the offering-plan requirement of the Martin Act. (United Housing Foundation, Inc. v Forman, 421 US 837; Global Reins. Corp.-U.S. Branch v Equitas Ltd., 18 NY3d 722; Matter of Walker v Walker, 86 NY2d 624; Abrahamson v Fleschner, 568 F2d 862; Rathborne v Rathborne, 683 F2d 914; Keys v Wolfe, 709 F2d 413; Perez-Rubio v Wyckoff, 718 F Supp 217; Pachter v Bernard Hodes Group, Inc., 10 NY3d 609; New York State Psychiatric Assn., Inc. v New York State Dept, of Health, 19 NY3d 17; Matter of Badem Bldgs, v Abrams, 70 NY2d 45.) II. The Attorney General reasonably rejected East Midtown Plaza Housing Company, Inc.’s proposed second amendment to its offering plan on the ground that it was false and misleading. (.Matter of Scherbyn v Wayne-Finger Lakes Bd. of Coop. Educ. Servs., 77 NY2d 753; 88 Assoc. v Abrams, 159 AD2d 412; Treger Mgt. Co. v Abrams, 180 AD2d 614; Matter of Gilman v New York State Div. of Hous. & Community Renewal, 99 NY2d 144; State of New York v Rachmani Corp., 71 NY2d 718; Council for Owner Occupied Hous. v Abrams, 72 NY2d 553.)

      Michael A. Cardozo, Corporation Counsel, New York City (Victoria Scalzo, Kristin M. Helmers and Ave Maria Brennan of counsel), for New York City Department of Housing Preservation and Development, respondent.
    The Appellate Division properly found that the vote of the resident shareholders of East Midtown Plaza Housing Company, Inc. on the issue of exiting the Mitchell-Lama program must be counted on a “one vote per dwelling unit” basis. (Matter of Brooklyn Assembly Halls of Jehovah’s Witnesses, Inc. v Department of Envtl. Protection of City of N.Y., 11 NY3d 327; Matter of Howard v Wyman, 28 NY2d 434; Matter of Tommy & Tina, Inc. v Department of Consumer Affairs of City of N.Y., 95 AD2d 724, 62 NY2d 671; Kralik v 239 E. 79th St. Owners Corp., 5 NY3d 54; Consolidated Resources, LLC v 210-220-230 Owner’s Corp., 59 AD3d 579; Mittman v Netherland Gardens Corp., 55 AD3d 512; Guzman v Haven Plaza Hous. Dev. Fund Co., 69 NY2d 559; Elliott v City of New York, 95 NY2d 730; Schumer v Caplin, 241 NY 346; Matter of Parkview Assoc, v City of New York, 71 NY2d 274, 488 US 801.)

      Himmelstein, McConnell, Gribben, Donoghue & Joseph, New York City (Kevin R. McConnell and Serge Joseph of counsel), for intervenor-appellant.
    I. East Midtown Plaza Housing Company, Inc.’s certificate of incorporation and the relevant statutes require a per-share vote. (2550 Olinville Ave. v Crotty, 149 Misc 2d 806, 185 AD2d 200, 81 NY2d 772; Mendel v Henry Phipps Plaza W., Inc., 6 NY3d 783; Blumenfeld v City of New York, 44 Misc 2d 475; Fe Bland v Two Trees Mgt. Co., 66 NY2d 556; Wapnick v Seven Park Ave. Corp., 240 AD2d 245; Spiegel v 1065 Park Ave. Corp., 305 AD2d 204; Matter of Madison v Striggles,
      228 AD2d 170.) II. This Court owes no deference to the Department of Housing Preservation and Development’s interpretation of the governing statutes. (Kurcsics v Merchants Mut. Ins. Co., 49 NY2d 451; Matter of Dworman v New York State Div. of Hous. & Community Renewal, 94 NY2d 359; Roberts v Tishman Speyer Props., L.P., 13 NY3d 270; Matter of Gruber [New York City Dept. of Personnel—Sweeney], 89 NY2d 225; Matter of Ansonia Residents Assn. v New York State Div. of Hous. & Community Renewal, 75 NY2d 206; Matter of Schenectady Police Benevolent Assn. v New York State Pub. Empl. Relations Bd., 85 NY2d 480; Matter of KSLM-Columbus Apts., Inc. v New York State Div. of Hous. & Community Renewal, 5 NY3d 303.) III. The Department of Housing Preservation and Development’s interpretation of the regulation and its reversal in policy were arbitrary and capricious. (Matter of Richardson v Commissioner of N.Y. City Dept. of Social Servs., 88 NY2d 35; Matter of Charles A. Field Delivery Serv. [Roberts], 66 NY2d 516; Matter of Blossom View Nursing Home v Novello, 4 NY3d 581; Matter of Cordero v Corbisiero, 80 NY2d 771; Matter of Roman Catholic Diocese of Albany v New York State Dept. of Health, 66 NY2d 948; Matter of CDL W. 45th St. v City of N.Y. Dept. of Fin., 308 AD2d 210; Matter of Singh v Taxi & Limousine Commn. of City of N.Y., 282 AD 2d 368; Boreali v Axelrod, 71 NY2d 1; Matter of Nicholas v Kahn, 47 NY2d 24.)

      Barry Mallin & Associates, P.C., New York City (Barry Mallin of counsel), for intervenor-respondent.
    I. East Midtown Plaza Housing Company, Inc.’s privatization plan is subject to the Martin Act disclosure requirements. (All Seasons Resorts v Abrams, 68 NY2d 81; People v Landes, 84 NY2d 655; SEC v Ralston Purina Co., 346 US 119; Doran v Petroleum Mgt. Corp., 545 F2d 893; United Housing Foundation, Inc. v Forman, 421 US 837; Tcherepnin v Knight, 389 US 332.) II. The Attorney General had a rational basis for rejecting East Midtown Plaza Housing Company, Inc.’s second amendment to the offering plan. (Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222; Matter of Salvati v Eimicke, 72 NY2d 784; Matter of Nelson v Roberts, 304 AD2d 20; E. & R. Mavin Constr. v Abrams, 180 AD2d 425; Matter of 140 W. 4th St. Corp. v Abrams, 152 AD2d 847; Matter of 44 W. 96th St. Assoc. v Abrams, 85 AD2d 563; Academy St. Assoc. v Spitzer, 50 AD3d 271.) III. The Department of Housing Preservation and Development had a rational basis for determining that the criteria for balloting was one vote per unit. (Guzman v Haven Plaza Hous. Dev. Fund Co., 69 NY2d 559; Matter of Acker v Berman, 54 Misc 2d 647.) IV East Midtown Plaza Housing Company, Inc. seeks to disavow the voting procedures after losing under the rules set forth in the offering plan.

      Collins, Dobkin & Miller, LLP, New York City (Stephen Dobkin of counsel), and Mary Foutz, Brooklyn, for Mitchell-Lama Residents Coalition and others, amici curiae.
    I. The election held on a one-vote-per-apartment basis was in keeping with the fundamental nature of Mitchell-Lama cooperatives. (Schwartz v Marien, 37 NY2d 487; Vernon Manor Co-op. Apts., Section I v Salatino, 15 Misc 2d 491; Smolinsky v 46 Rampasture Owners, 230 AD2d 620.) II. There exist no statutory or regulatory exceptions to the application of the one-vote-per-apartment rule in this case. (Matter of Tormey v LaGuardia, 172 Misc 1091, 259 App Div 802, 283 NY 779; Matter of Archdeacon v Town of Oyster Bay, 12 Misc 3d 438; Garson v Garson, 105 AD2d 726, affd sub nom. Garson v Rapping, 66 NY2d 928; Wapnick v Seven Park Ave. Corp., 240 AD2d 245; Spiegel v 1065 Park Ave. Corp., 305 AD2d 204; Avon Prods., Inc. v Chartwell Assoc. L.P., 907 F2d 322.) III. The absence of ongoing governmental oversight is an essential difference between private and Mitchell-Lama cooperatives mandating the application of the Martin Act to the proposed privatization of East Midtown Plaza Housing Company, Inc. (Cadplaz Sponsors v Cadman Towers, 84 Misc 2d 961, 56 AD2d 780.)

      . The Mitchell-Lama Law states that a limited-profit housing company— like East Midtown—that is aided by a New York City loan made after May 1, 1959 may
      “voluntarily be dissolved, without the consent of the [New York City Department of Housing Preservation and Development] not less than twenty years after the occupancy date upon the payment in full of the remaining balance of principal and interest due and unpaid upon the mortgage or mortgages and of any and all expenses incurred in effecting such voluntary dissolution” (Private Housing Finance Law § 35 [2]).

   OPINION OF THE COURT

Graffeo, J.

In this proceeding, we hold that the Martin Act applies to the proposed privatization of a Mitchell-Lama cooperative apartment complex. Based on the circumstances of this case, we also conclude that a vote to determine whether the cooperative withdraws from the Mitchell-Lama program must be counted on a per-apartment basis rather than a per-share basis.

L

Petitioner East Midtown Plaza Housing Company, Inc. (East Midtown) has been a limited-profit housing company organized under the Mitchell-Lama Law since 1968. It operates a 746-unit cooperative housing project located in six buildings in Manhattan. Ownership shares in East Midtown are not allocated equally among the apartment units; larger units are allotted more shares. East Midtown’s certificate of incorporation specifies that each shareholder is entitled to one vote at shareholder meetings, regardless of the number of shares owned. In 2004, East Midtown’s cooperative shareholders held a vote to decide whether to withdraw from the Mitchell-Lama program and become a private cooperative apartment complex, as permitted by Private Housing Finance Law § 35. Under the proposed privatization plan, East Midtown would dissolve and all its assets would be transferred to a newly incorporated private cooperative, accompanied by a formal issuance of new shares in the entity. If the votes were counted on a per-share basis, the 2004 proposal achieved the requisite two-thirds supermajority for passage, but if the votes were counted on a per-apartment basis, the proposal did not garner sufficient votes for privatization.

After the vote was taken, respondents, the New York City Department of Housing Preservation and Development (HPD) and the New York State Attorney General, informed East Midtown that a new vote was required because East Midtown had improperly held the privatization vote without first filing a cooperative offering plan with the Attorney General’s office pursuant to the Martin Act. The Attorney General also notified East Midtown that, in accordance with the voting rights provision in East Midtown’s certificate of incorporation, passage by two thirds of East Midtown’s dwelling units, rather than two thirds of the outstanding shares, would be necessary for approval.

East Midtown subsequently revised its privatization proposal and in 2008 the Attorney General accepted the offering plan. Unlike the 2004 proposal, the 2008 plan did not contemplate a transfer of property or a physical exchange of shares. Rather, the privatization was to be effectuated by an amendment to East Midtown’s certificate of incorporation. The proponents of the new plan informed shareholders that HPD had taken the position that the privatization vote was to “be conducted on an apartment-by-apartment basis (i.e., one vote per apartment) without regard to the number of shares held by each shareholder.” East Midtown further advised the shareholders that it was reserving the right to challenge the voting requirement directing a count on a per-apartment basis.

A second vote was held in 2009, resulting in the same outcome as the original 2004 vote: the proposal would have been approved if the votes were tallied using a one-vote-per-share rule, but not if counted under a one-vote-per-household formula as directed by the certificate of incorporation and HPD. Following the vote, East Midtown filed a proposed second amendment to the offering plan with the Attorney General. This amendment sought to declare the privatization plan “effective,” stating that the 2008 plan had been adopted by “the affirmative vote of at least two thirds of the outstanding shares of East Midtown . . . by counting one vote per share.” The Attorney General refused to accept the amendment.

East Midtown responded by commencing this CPLR article 78 proceeding seeking to compel the Attorney General to accept the second amendment declaring the plan effective and to direct HPD to recognize that the plan achieved the necessary two-thirds shareholder vote under the one-vote-per-share formula. The petition also sought a declaration that the Attorney General lacked jurisdiction over East Midtown’s efforts to exit the Mitchell-Lama program on the theory that the Martin Act did not apply to the transaction. Two tenant organizations intervened in the litigation—East Midtown Plaza Tenant-Cooperator Association, which supported East Midtown, and East Midtown Plaza Mitchell-Lama Organization, a group that opposed privatization.

Supreme Court denied the petition and dismissed the proceeding (2010 NY Slip Op 30532[U] [2010]). The Appellate Division, with one Justice dissenting, affirmed (85 AD3d 485 [1st Dept 2011]). We granted East Midtown and East Midtown Plaza Tenant-Cooperator Association leave to appeal (18 NY3d 803 [2012]), and now affirm.

IL

With respect to the jurisdictional reach of the Martin Act, East Midtown argues that it should not have been required to file an offering plan because the Attorney General lacks authority over its withdrawal from the Mitchell-Lama program. East Midtown contends that the Martin Act—the statutory predicate for the Attorney General’s oversight—does not apply here because its 2008 privatization plan did not involve the “offering or sale” of securities as required by the statute. It emphasizes that, although the original 2004 proposal would have resulted in a transfer of assets and/or exchange of shares, the 2008 plan merely called for an amendment to East Midtown’s certificate of incorporation, with no conveyance of shares. The Attorney General disagrees, asserting that, however it is packaged, the privatization of a Mitchell-Lama cooperative complex comfortably falls within the parameters of the Martin Act.

The Martin Act (General Business Law art 23-A) regulates the offer and sale of securities within or from New York (see Kralik v 239 E. 79th St. Owners Corp., 5 NY3d 54, 58 [2005]). The Attorney General is responsible “for implementing and enforcing the Martin Act, which grants both regulatory and remedial powers aimed at detecting, preventing and stopping fraudulent securities practices” (id. at 58-59). As relevant here, the Martin Act makes it illegal for a person to make or take part in “a public offering or sale” of securities consisting of participation interests in real estate, including cooperative apartment buildings, unless an offering statement is filed with the Attorney General (General Business Law § 352-e [1] [a]). The purpose of the disclosures required in an offering plan is to safeguard the purchasers of cooperatives and condominiums by mandating “full disclosure of risks” and promoting “unit purchasers’ self-protection by analysis of risks” (Kerusa Co. LLC v W10Z/515 Real Estate Ltd. Partnership, 12 NY3d 236, 243 [2009] [internal quotation marks and citation omitted]).

We have emphasized that General Business Law § 352-e (1) (a) “should be liberally construed to give effect to its remedial purpose of protecting the public from fraudulent exploitation in the offer and sale of securities” (All Seasons Resorts v Abrams, 68 NY2d 81, 86-87 [1986]). In our application of the Martin Act we have repeatedly found it appropriate to be guided by the decisions of federal courts interpreting federal blue sky laws (see id. at 87; see also People v Landes, 84 NY2d 655, 660 [1994] [“Although the Martin Act was enacted in 1921, its present form generally tracks the Federal securities acts of 1933 and 1934. Accordingly, we have looked to Federal court decisions construing those statutes when interpreting our own”]; State of New York v Rachmani Corp., 71 NY2d 718, 726 [1988] [observing that the remedial purposes of the state and federal statutes are the same and that General Business Law § 352-e (1) (a) “makes specific reference to the Federal Securities Act of 1933”]). We therefore turn to the federal precedents.

Federal courts have recognized that changes in the rights of the holders of existing securities can amount to a “purchase or sale” within the meaning of the federal securities laws. The Second Circuit has explained that the test is whether there has been such a “significant change in the nature of the investment or in the investment risks as to amount to a new investment” (Gelles v TDA Indus., Inc., 44 F3d 102, 104 [2d Cir 1994] [internal quotation marks and citation omitted]; see also Abrahamson v Fleschner, 568 F2d 862, 868 [2d Cir 1977], cert denied sub nom. Harry Goodkin & Co. v Abrahamson, 436 US 905 [1978] [same]; 3 Hazen, Securities Regulation § 12.6 [1] at 557 [6th ed 2009] [“Concepts of purchase and sale are to be construed flexibly in order to accomplish the purpose of the securities laws. The courts will consider the economic reality of the transaction and whether it lends itself to fraud in the making of an investment decision”]). The pertinent inquiry focuses on “the economic reality of the transaction” (Keys v Wolfe, 709 F2d 413, 417 [5th Cir 1983] [internal quotation marks and citation omitted]). We have applied a similarly adaptable standard in ascertaining whether an interest qualifies as a “security” within the meaning of the Martin Act, recognizing that substance and economic actuality will control over form (see All Seasons Resorts, 68 NY2d at 88).

Here, the privatization of East Midtown’s cooperative apartment complex would result in a number of substantial changes to the nature of its shareholders’ interests. Most fundamentally, privatization would enable residents to sell their shares at market rates. In stark contrast, the resale price of shares in a Mitchell-Lama cooperative apartment is set by law at an amount that permits a seller to recover paid-in capital, not earn a profit (see Private Housing Finance Law § 31-a). Indeed, East Midtown acknowledges that the ability to sell shares at market prices is the primary reason why it desires to exit the Mitchell-Lama program.

Furthermore, privatization would result in East Midtown’s loss of eligibility for government-subsidized financing and property tax reductions available under Mitchell-Lama. Other significant alterations upon privatization would include the imposition on shareholders of a 45% transfer fee or “flip tax” to be paid to East Midtown from the proceeds of the first sale of shares; the possibility that individual shareholders would become disqualified for government programs for persons in need; and potential increases in maintenance charges. In short, the changes affecting shareholders are substantial enough to constitute a different investment such that the proposed privatization can fairly be characterized as an “offering or sale” of securities under the Martin Act.

We do not accept East Midtown’s argument distinguishing the 2004 and 2008 privatization plans since it elevates form over substance. Mindful of the economic realities of the transaction, it matters not that the 2008 plan envisioned an amendment to the certificate of incorporation rather than a physical exchange of shares, as contemplated by the earlier plan (see 3 Hazen, Securities Regulation § 12.6 [3] at 558-559 [6th ed 2009] [“Amendments to a corporation’s articles of incorporation may result in the alteration of existing shareholder rights and thus change the nature of the shares. Alterations in the rights of securities holders can constitute a sale of the old securities and a purchase of the new”]). The end result under either proposal is the same—privatization and market value resale potential. Hence, the Attorney General properly required East Midtown to file an offering statement under the Martin Act to allow existing shareholders to make an informed decision regarding the pros and cons of withdrawal from the Mitchell-Lama program.

IIL

East Midtown also contends that the courts below erred in holding that the shareholder vote to privatize had to be counted on a one-vote-per-apartment basis. It claims that the Business Corporation Law and an HPD regulation both require that the vote be calculated using a one-vote-per-share formula, regardless of the language in the certificate of incorporation. Under this formulation, the 2009 vote resulted in sufficient votes for approval of the 2008 privatization plan. HPD and the Attorney General counter that the courts below properly concluded that the vote was governed by a one-vote-per-apartment rule and, under this methodology, the 2009 vote did not achieve the necessary supermajority margin to exit Mitchell-Lama.

Our analysis focuses on East Midtown’s certificate of incorporation, which expressly provides that its shareholders “shall be entitled to one vote at any and all meetings of stockholders for any and all purposes regardless of the number of shares held by such holder, except as otherwise provided by statute.” In other words, as East Midtown acknowledges, the certificate generally establishes a one-vote-per-apartment formula. East Midtown relies on the final clause of the voting provision, asserting that Business Corporation Law § 1001 “otherwise provides” a different method—it directs that a privatization vote be conducted on a one-vote-per-share basis.

Business Corporation Law § 1001 generally governs the dissolution of a corporation. As relevant to this case, section 1001 provides that dissolution may be authorized at a shareholder meeting by “two-thirds of the votes of all outstanding shares entitled to vote thereon” (Business Corporation Law § 1001 [a] [ii]). East Midtown interprets this language to mandate a per-share vote for corporate dissolution, regardless of any contrary language that may be found in the corporation’s certificate of incorporation. We are not persuaded for three reasons. First, section 1001 requires a two-thirds vote of “all outstanding shares entitled to vote” to approve dissolution (emphasis added). In substance, the one-vote-per-apartment rule set forth in East Midtown’s certificate of incorporation entitles the holder of shares to one vote at stockholder meetings. Second, the reference to “all outstanding shares” in section 1001 clarifies that a dissolution vote must be passed not merely by two thirds of those voting at the shareholder meeting (see Business Corporation Law § 614 [b] [unless otherwise specified in the Business Corporation Law, votes are to be calculated by reference to those present and voting at a quorum meeting]), but by a supermajority of all shareholders in the company. Finally, the thrust of section 1001 is directed to how corporate shareholders may authorize dissolution; the statute does not purport to calculate the relative weight to be given to each share entitled to vote.

Instead, a different provision of the Business Corporation Law specifically addresses shareholder voting rights. Business Corporation Law § 612 (a) states that “[e]very shareholder of record shall be entitled at every meeting of shareholders to one vote for every share standing in his name on the record of shareholders, unless otherwise provided in the certificate of incorporation” (emphasis added). Section 612 therefore establishes a default rule of one vote per share. But it allows corporations to adopt a different vote-count methodology in their certificates of incorporation. And East Midtown did just that, it selected a one-vote-per-household voting formula in its certificate of incorporation. Because the Business Corporation Law does not mandate any specific method of vote calculation, we believe that East Midtown’s certificate of incorporation controls.

East Midtown further asserts that an HPD regulation in effect at the time of the 2009 vote required that the votes be counted on a per-share basis. That regulation provided: “Dissolution and/or reconstitution of the mutual housing company requires approval of two-thirds (2/s) of the outstanding shares of the corporation as mandated by the Business Corporation Law” (28 RCNY 3-14 [i] [former (7)]). Although the regulation may have been inartfully worded, it incorporated by reference and tracked Business Corporation Law § 1001 (a) (ii). For the same reasons that lead us to conclude that no conflict exists between the Business Corporation Law and East Midtown’s certificate of incorporation, the HPD regulation can be read compatibly with the certificate of incorporation.

Consequently, the courts below correctly held that the 2009 vote should be calculated using the one-vote-per-apartment formula contained in East Midtown’s certificate of incorporation. Because the necessary two-thirds approval was not met under this methodology, the Attorney General properly refused to accept East Midtown’s second amendment declaring an effective vote to privatize. East Midtown therefore remains subject to the Mitchell-Lama Law until such a time as two thirds of the households agree to a privatization plan.

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

Chief Judge Lippman and Judges Cipakick, Read, Smith and Pigott concur.

Order affirmed, with costs.

      . The legislature adopted the Mitchell-Lama Law (Private Housing Finance Law art II) in 1955 to offer private housing companies financial incentives to develop low and moderate income housing (see Matter of KSLM

        Columbus Apts., Inc. v New York State Div. of Hous. & Community Renewal, 5 NY3d 303, 308 [2005]). The program “encourages such housing by offering State and municipal assistance to developers in the form of long-term, low-interest government mortgage loans and real estate tax exemptions. In return for these financial benefits, developers agree to regulations concerning rent, profit, disposition of property and tenant selection” (Matter of Columbus Park Corp. v Department of Hous. Preserv. & Dev. of City of N.Y., 80 NY2d 19, 23 [1992]).

      . Plainly, the Martin Act applies to the conversion of a rental apartment building into a cooperative building (see 511 W. 232nd Owners Corp. v Jennifer Realty Co., 98 NY2d 144 [2002]; Richards v Kaskel, 32 NY2d 524 [1973]). The question posed by this appeal is whether the act further applies to the privatization of an already-existing Mitchell-Lama cooperative apartment complex.

      . The Mitchell-Lama Law contemplates the dissolution and reconstitution of a limited-profit housing company that desires to privatize (see Private Housing Finance Law § 35 [2], [3]).

      . East Midtown’s certificate of incorporation permits only one class of shares. The one-vote-per-apartment voting method is compatible with the certificate’s requirements because East Midtown has but one class of shares and the certificate specifies how votes are counted within that class—a holder is entitled to one vote.

      . We note that the parties do not address the applicability, if any, of the Not-for-Profit Corporation Law.

      . HPD subsequently amended 28 RCNY 3-14 (i) (7) to require approval by two thirds of the dwelling units in the housing company. The parties all agree that the revised regulation, promulgated after the 2009 vote, does not apply to this case.


source: Caselaw Access Project

author: Chief Judge Lippman.

license: Public Domain

text:
    [982 NE2d 76, 958 NYS2d 314]
    Richard M. Metz, as Personal Representative of the Estate of Mary Helen Metz, Deceased, et al., Respondents, v State of New York, Appellant.
    Argued October 18, 2012;
    decided November 29, 2012

      POINTS OF COUNSEL

      Eric T. Schneiderman, Attorney General, Albany (Andrew D. Bing, Barbara D. Underwood and Laura Etlinger of counsel), for appellant.
    I. The claims must be rejected under the “public duty” rule. (O’Connor v City of New York, 58 NY2d 184; McLean v City of New York, 12 NY3d 194; Valdez v City of New York, 18 NY3d 69; Riss v City of New York, 22 NY2d 579; Motyka v City of Amsterdam, 15 NY2d 134; Lauer v City of New York, 95 NY2d 95; Pelaez v Seide, 2 NY3d 186; Miller v State of New York, 62 NY2d 506; Worth Distribs. v Latham, 59 NY2d 231; Sanchez v Village of Liberty, 42 NY2d 876.) II. Alternatively, if the Court does not reject the claims on the ground of no special duty, it should reinstate the State of New York’s immunity defense. (Valdez v City of New York, 18 NY3d 69; Haddock v City of New York, 75 NY2d 478.)

      Hacker Murphy, LLP, Latham (James E. Hacker of counsel), for respondents.
    I. The State of New York’s affirmative defense was properly dismissed pursuant to CPLR 3211 (b). (Tango v Tulevech, 61 NY2d 34; In re Dorothy J v City of New York, 749 F Supp 2d 50; Haddock v City of New York, 75 NY2d 478.) II. On the record before this Court the claims should not be rejected under the “public duty” rule. (O’Connor v City of New York, 58 NY2d 184; Pelaez v Seide, 2 NY3d 186; Lauer v City of New York, 95 NY2d 95; Valdez v City of New York, 18 NY3d 69; Chiarini v County of Ulster, 9 AD3d 769; Boland v State of New York, 218 AD2d 235; Racine v Morris, 201 NY 240; Van Gaasbeck v Webatuck Cent. School Dist. No. 1, 21 NY2d 239; Smullen v City of New York, 28 NY2d 66; Steitz v City of Beacon, 295 NY 51.)

      Michael A. Cardozo, Corporation Counsel, New York City (Kristin M. Helmers and Norman Corenthal of counsel), for City of New York, amicus curiae.
    The claims should have been dismissed for failure to plead and demonstrate facts establishing a special duty. (Valdez v City of New York, 18 NY3d 69; Lauer v City of New York, 95 NY2d 95; Pelaez v Seide, 2 NY3d 186; Smullen v City of New York, 28 NY2d 66; O’Connor v City of New York, 58 NY2d 184; Sanchez v Village of Liberty, 42 NY2d 876; Motyka v City of Amsterdam, 15 NY2d 134; McLean v City of New York, 12 NY3d 194; Worth Distribs. v Latham, 59 NY2d 231; Garrett v Holiday Inns, 58 NY2d 253.)
   OPINION OF THE COURT

Chief Judge Lippman.

The issue presented by this appeal is whether the State can be held liable to individuals who were injured and the personal representatives of those who lost their lives due to the tragic capsizing of a public vessel—the Ethan Allen. We conclude that because the State owes no special duty to these claimants, the claims that the State’s inspectors failed to certify safe passenger capacity on the vessel must be dismissed.

The Ethan Allen was a public vessel operating as a tour boat on Lake George. In 2005, 20 passengers were killed and several others were injured when the boat capsized and sank. As a public vessel, the Ethan Allen had been subject to yearly state inspections, at which an inspector appointed by the Commissioner of the New York State Office of Parks, Recreation and Historic Preservation (OPRHP) would issue a certificate indicating, among other things, the vessel’s maximum passenger capacity. At the time the vessel sank, it had been carrying 47 passengers and 1 crew member, within the 48-passenger maximum set forth in the certificate of inspection.

The State regulates the use of public vessels under the Navigation Law. In order to operate a public vessel upon the state’s waters, a certifícate of inspection is required (see Navigation Law § 50). An inspector must carefully examine the vessel and its equipment and, “if satisfied that [the ship] is in all respects safe and conforms to the requirements] of [the Navigation Law], shall” execute the certificate of inspection (Navigation Law §§ 63, 13). The inspector is also required to determine the number of passengers that can be safely transported and that number&emdash;along with the number of crew members necessary to safely operate the vessel&emdash;must be set forth in the certificate of inspection (see Navigation Law §§ 13, 63).

The Ethan Allen was constructed in 1964 and its first inspections were conducted by the United States Coast Guard. The vessel’s last certificate of inspection from the Coast Guard set forth a maximum passenger capacity of 48 persons and 2 required crew members, for a total capacity of 50 persons. From 1979, when OPRHP began certifying the ship, to the time of the accident in 2005, the passenger capacity was consistently certified at 48 persons. This was so, despite the fact that the Ethan Allen was modified in 1989&emdash;replacing its canvas canopy with a canopy made of wood. Several state inspectors testified at their examinations before trial that they did not independently verify the vessel’s passenger capacity by conducting a stability test, but rather relied on the number certified from the previous year. For instance, one inspector agreed that the number was “rubber stamped” based on the capacity from the prior certificate of inspection and another referred to the passenger capacity certified by the Coast Guard as “gospel.”

The 48-passenger limit certified by the state inspectors was, however, much higher than the level at which the vessel could safely be operated. Notably, since this accident, the State has increased the average weight per passenger from 140 pounds&emdash;an approximation apparently adopted in the 1950s and utilized by the Coast Guard&emdash;to 174 pounds.

Claimants commenced this action against the State alleging that it had been negligent in certifying an unsafe passenger capacity, resulting from the use of outdated passenger weight criteria, and in failing to require a new stability assessment after the vessel had been significantly modified. The State answered raising several defenses, including governmental immunity.

The Court of Claims denied claimants’ motion to dismiss the State’s affirmative defense of immunity and denied the State’s cross motion for summary judgment (27 Misc 3d 1209[A], 2010 NY Slip Op 50635[U] [2010]). The court found insufficient evidence to allow it to determine whether the inspections were proprietary or governmental in nature. In addition, the court found issues of fact as to whether the inspections were ministerial or discretionary acts.

The Appellate Division modified by granting claimants’ motion to dismiss the State’s affirmative defense, dismissed the affirmative defense and, as so modified, affirmed (86 AD3d 748 [3d Dept 2011]). The Court found that the inspections were a governmental function, but concluded that the State had failed to demonstrate that its inspectors had in fact exercised any discretion in certifying the vessel’s passenger capacity. The Appellate Division granted the State’s motion for leave to appeal to this Court, certifying the following question for our review: “Did this Court err, as a matter of law, in modifying, on the law, the order of [the Court of Claims], by reversing so much thereof as denied claimants’ motion to dismiss defendant’s affirmative defense of sovereign immunity; granting said motion and dismissing the affirmative defense; and, as so modified, affirming the order?” We reverse and answer the certified question in the affirmative.

As we recently made clear in Valdez v City of New York (18 NY3d 69, 80 [2011]), claimants must first establish the existence of a special duty owed to them by the State before it becomes necessary to address whether the State can rely upon the defense of governmental immunity. In that vein, it is well settled that the State “is not liable for the negligent performance of a governmental function unless there existed ‘a special duty to the injured person, in contrast to a general duty owed to the public’ ” (McLean v City of New York, 12 NY3d 194, 199 [2009], quoting Garrett v Holiday Inns, 58 NY2d 253, 261 [1983]).

Plainly, the inspections at issue here are consistent with those that we have deemed governmental functions. The vessel inspections are undertaken by the State for safety purposes and are akin to inspections conducted by a municipality when issuing certificates of occupancy or determining compliance with fire and safety codes (see Worth Distribs. v Latham, 59 NY2d 231, 237 [1983]; Garrett, 58 NY2d at 261).

We have recognized three ways in which a special relationship can be formed, resulting in a special duty—

“ ‘(1) when the municipality violates a statutory duty enacted for the benefit of a particular class of persons; (2) when it voluntarily assumes a duty that generates justifiable reliance by the person who benefits from the duty; or (3) when the municipality assumes positive direction and control in the face of a known, blatant and dangerous safety violation’ ” (McLean, 12 NY3d at 199 [citations omitted]).

Here, claimants focus on the State’s alleged violation of its duty under the Navigation Law.

“[I]n the absence of some special relationship creating a duty to exercise care for the benefit of particular individuals, liability may not be imposed on a municipality for failure to enforce a statute or regulation” (O’Connor v City of New York, 58 NY2d 184, 192 [1983]). The statutory scheme at issue here does require inspectors to issue a certificate of inspection indicating that the vessel is safe and, specifically, certifying the number of passengers the vessel can safely transport (see Navigation Law §§ 13, 63). However, these statutory obligations do not create a special duty of care owed by the State to particular passengers. Rather, this case is similar to O’Connor, where the City’s inspector either failed to observe a defect in the gas piping system or failed to insist that such defect be corrected before certifying that the system satisfied the applicable building department rules and regulations. We observed that those regulations were intended to benefit the persons who were injured in the explosion that ensued after the defective gas system was activated “but in the broad sense of protecting all members of the general public similarly situated” (O’Connor, 58 NY2d at 190). There, as here, the provisions at issue—although clearly designed to protect public safety—did not create a duty to particular individuals.

Moreover, recognizing a private right of action would be incompatible with the legislative design. The Navigation Law does not provide for governmental tort liability, but instead for fines and criminal penalties to be imposed upon vessel owners and operators (see e.g. Navigation Law § 62 [negligence on the part of vessel owners/employees that results in the death of a passenger is a class E felony]; Navigation Law §§ 58, 73-b [an owner or operator who overloads the vessel beyond the designated passenger capacity will be guilty of a misdemeanor]). In addition, when the legislature amended the Navigation Law in response to this tragedy, it imposed additional safety standards and enhanced certain penalties, but still did not provide for a private right of action (see L 2007, ch 320). Under these circumstances, we can infer that the legislature has determined that these penalties are the best way to enforce violations of the Navigation Law and that the failure to establish a private right of action against the State was deliberate (see e.g. McLean, 12 NY3d at 200-201).

Although the law is clear, the upshot is that, regardless of any negligence on the part of the State, the victims of this disastrous wreck are essentially left without an adequate remedy. The legislature currently has a proposal before it to require public vessels to carry marine protection and indemnity insurance (2011 NY Assembly Bill A6699). We note that such a requirement—had it existed—might have been able to provide a modicum of relief here.

In light of our determination, it is unnecessary to address the parties’ remaining contentions.

Accordingly, the order of the Appellate Division should be reversed, with costs, the claims dismissed and the certified question answered in the affirmative.

Judges Cipakick, Graffeo, Read, Smith and Pigott concur.

Order reversed, with costs, the claims dismissed and the certified question answered in the affirmative.

       “‘Public Vessel’ shall mean and include every vessel which is propelled in whole or in part by mechanical power and is used or operated for commercial purposes on the navigable waters of the state; that is either carrying passengers, carrying freight, towing, or for any other use; for which a compensation is received” (Navigation Law § 2 [6] [a]).


author: Graffeo, J. Chief Judge Lippman (dissenting).

text:
    [981 NE2d 265, 957 NYS2d 669]
    The People of the State of New York, Respondent, v Tyrone Watson, Appellant.
    Argued October 16, 2012;
    decided November 29, 2012

      POINTS OF COUNSEL

      Steven Banks, Legal Aid Society, Criminal Appeals Bureau, New York City (Natalie Rea of counsel), for appellant.
    The trial court erred in refusing to consider the requested agency defense to the charge of criminal facilitation, mandating reversal of the judgment and dismissal of that charge. (Abuelhawa v United States, 556 US 816; United States v Sawyer, 210 F2d 169; People v Lam Lek Chong, 45 NY2d 64; People v Roche, 45 NY2d 78; People v Argibay, 45 NY2d 45; People v Manini, 79 NY2d 561; People v Gray, 86 NY2d 10; People v Feingold, 7 NY3d 288; People v Dreyden, 15 NY3d 100; People v Burwell, 53 NY2d 849.)

      Richard A. Brown, District Attorney, Kew Gardens (Sharon Y. Brodt and John M. Castellano of counsel), for respondent.
    Defendant’s claim that the verdict was repugnant is unpreserved for appellate review and without merit. (People v Carter, 7 NY3d 875; People v Alfaro, 66 NY2d 985; People v Satloff, 56 NY2d 745; People v Muhammad, 17 NY3d 532; People v Santos, 86 NY2d 869; People v Graves, 85 NY2d 1024; People v Feingold, 7 NY3d 288; People v Ortiz, 76 NY2d 446; People v Lam Lek Chong, 45 NY2d 64, 439 US 935; People v Argibay, 45 NY2d 45.)
   OPINION OF THE COURT

Graffeo, J.

Defendant Tyrone Watson took an undercover police officer to meet a drug dealer, handled the cocaine transaction for the officer and then gave him the drugs. For these acts, defendant was charged with selling cocaine, facilitating the sale and possessing narcotics. At trial, defendant claimed that he was not guilty of the sale or facilitation counts because he was acting as the agent of the buyer. The trial court acquitted defendant of the sale under an agency theory, but convicted him of facilitation and possession. We must now determine whether a claim of agency may be interposed as a defense to the crime of facilitating a drug sale.

I

Legislative efforts to combat drug abuse in New York date back to the 1800s (see Thomas M. Quinn & Gerald T. McLaughlin, The Evolution & Present Status of New York Drug Control Legislation, 22 Buff L Rev 705, 709 [1972-1973]). Criminal liability for the sale and possession of cocaine was first imposed in the early twentieth century (see id. at 711-712). During the next 50 years, the federal government and state legislatures increasingly relied on penal statutes to stem the tide of narcotics addiction (see id. at 713-732). By the early 1970s, a growing consensus recognized that earlier deterrence efforts were not effective and that new approaches were needed (see Interim Rep of Temp St Commn to Evaluate the Drug Laws, 1972 Legis Doc No. 10 at 7, 58). Proposals for change ran the gamut from legalization to more punitive criminal sanctions (see id. at 58).

The latter strategy was embraced by Governor Nelson Rockefeller, who believed that New York had unsuccessfully “tried every possible approach to stop addiction and save the addict through education and treatment” (Annual Message of the Governor, 1973 McKinney’s Session Laws of NY at 2318, quoted in People v Davis, 33 NY2d 221, 228 [1973], cert denied 416 US 973 [1974]). At the same time, the legislature was grappling with what it “found to be a high recidivism rate in drug-related crimes, an inadequate response to less severe punishment, and an insidiously growing drug abuse problem” (People v Broadie, 37 NY2d 100, 114 [1975], cert denied 423 US 950 [1975]). It accepted the Governor’s plan and a series of bills were passed that came to be known as the “Rockefeller Drug Laws” (see L 1973, chs 276, 277, 278, 676, 1051).

The centerpiece of the new laws was a “radical restructuring of not only drug laws but of sentencing statutes as well” (Albert M. Rosenblatt, New York’s New Drug Laws & Sentencing Statutes at v [Law Journal Press 1973]). In adopting harsher consequences for the sale and possession of illegal drugs, New York’s statutory penalties became the most stringent in the nation and narcotics crimes were punished “more severely and inflexibly than almost any other offense in the State”—elevating many of them to the status shared by second-degree murder, first-degree kidnapping and first-degree arson (People v Broadie, 37 NY2d at 115). Specifically, mandatory indeterminate life sentences were imposed “in all narcotic drug sales or transfers, however small, and for possession of over one eighth of an ounce” (Albert M. Rosenblatt, New York’s New Drug Laws & Sentencing Statutes at v). Although the statutory mínimums ranged from one year to 25 years (depending on the quantity of drug sold or possessed), the concept of an indeterminate life sentence meant that defendants who were released on parole were subject to supervision for the remainder of their lives.

In addition to the increased penalties, the preexisting Penal Law definition of the term “sell” resulted in certain persons, who would not ordinarily be considered drug dealers, being swept within the life-imprisonment provisions of the Rockefeller Drug Laws (see generally Arnold D. Hechtman, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, Penal Law § 220.00 at 13 [1980]). This occurred because the term “sell” was defined as covering not only a traditional sale or exchange for consideration, but also to “give or dispose of to another, or to offer or agree to do the same” (Penal Law § 220.00 [1]; cf. Penal Law of 1909 § 1751). Consequently, “any form of transfer of a controlled substance from one person to another”—no matter how minuscule the amount and regardless of whether there was a profit—was treated as a drug sale that could land the offender in prison for life (William C. Donnino, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, Penal Law § 220.00 at 22). In theory, this broad definition of “sell” included anyone who, upon request, offered to procure a small quantity of narcotics for another individual as a favor or without an expectation of personal benefit.

Defendants who became ensnared in this definitional net and faced charges of criminal sale of a controlled substance borrowed an “agency defense” theory that had been successfully used in criminal prosecutions during Prohibition (see e.g. State v Lynch, 81 Ohio St 336, 90 NE 935 [1910]). The “agency” doctrine was premised on the concept that a “person who acts solely as the agent of a buyer in procuring drugs for the buyer is not guilty of selling the drug to the buyer, or of possessing it with intent to sell it to the buyer” (William C. Donnino, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, Penal Law § 220.00 at 33).

This Court endorsed the agency defense in the context of a drug sale in People v Lam Lek Chong (45 NY2d 64 [1978], cert denied 439 US 935 [1978]). We observed that the sale of controlled substances was treated more harshly than possession and that there “are certain cases where the defendant’s mere delivery of the drugs does not appear to involve the same degree of culpability, or warrant the extreme penalties, associated with pushing drugs” (id. at 72). We further reasoned that when the legislature drafted the definition of “sell,” it was presumably aware of the earlier decisional law that recognized agency as a defense to the sale of illegal substances; yet, the legislature did not evince an intent to require the courts to abandon application of the defense (see id. at 73-74). We therefore held that the agency defense could be asserted in a drug sale case, which required the finder of fact to determine the extent of an intermediary’s criminal liability, either as a seller or a purchaser for another (see id. at 74). To reach that conclusion, we indicated that the jury should consider

“the nature and extent of the relationship between the defendant and the buyer, whether it was the buyer or the defendant who suggested the purchase, whether the defendant has had other drug dealings with this or other buyers or sellers and, of course, whether the defendant profited, or stood to profit, from the transaction” (id. at 75).

In three cases decided on the same day as Lam Lek Chong, we further explained that an agency defense (1) must be charged to the jury if any reasonable view of the evidence supports it (see People v Roche, 45 NY2d 78, 86 [1978], cert denied 439 US 958 [1978]); (2) cannot be used by a person who acts “at the very least as a middleman or a broker for his supplier” (People v Argibay, 45 NY2d 45, 50 [1978], cert denied sub nom. Hahn-Diguiseppe v New York, 439 US 930 [1978]); and (3) does not apply to a drug possession charge (see People v Sierra, 45 NY2d 56, 58 [1978]). The harshness of the sentences that were imposed under the Rockefeller Drug Laws have been mitigated (see e.g. People v Acevedo, 14 NY3d 828, 831 [2010]; People v Utsey, 7 NY3d 398, 401 [2006] [both discussing the Drug Law Reform Act of 2004 (L 2004, ch 738)]), but the agency defense nevertheless continues to provide a means of determining the extent of the intermediary’s culpability as either a buyer or seller of narcotics (see generally People v Davis, 14 NY3d 20, 24 [2009]). Surprisingly, in more than 30 years since our Court recognized the agency doctrine, we have not had occasion to consider whether it applies similarly to a charge of criminal facilitation.

II

At approximately 7:00 p.m. on July 24, 2007, an NYPD narcotics unit arrived at a location in Queens. Acting as an undercover buyer, a narcotics sergeant approached defendant Tyrone Watson and asked him where he could find some “rock.” Defendant inquired how much he wanted and the officer stated that he had $40. Defendant indicated that he knew how to obtain cocaine and used a pay phone to place a call. When no one answered, defendant called another number but was again unsuccessful. Defendant then remarked “we can go to my boy’s house on 123[rd] Street and Sutphin Boulevard.” Defendant suggested that they take a bus and offered to pay the officer’s fare.

While en route, the officer gave defendant $40 in pre-recorded buy money. About 10 minutes later, the pair got off the bus and walked to a location where they encountered “JD Blue.” Defendant gave him a hug, introduced the officer as “my man” and said that his companion “want[ed] two fat ones” before handing over the buy money to JD Blue.

The three men then entered a building and JD Blue left the other two alone for a few minutes. When JD Blue returned, he gave defendant two ziplock bags containing crack and defendant passed them to the officer. Defendant asked to smoke the drugs with the officer but was rebuffed and the officer departed with the cocaine. Defendant and JD Blue were arrested a short time later by a uniformed officer after the undercover positively identified the men. Defendant had two bags of cocaine and a crack pipe on his person. The drugs that defendant procured tested positive as cocaine.

As a result of his involvement in the drug transaction, defendant was indicted for felony sale of a controlled substance in the third degree, as well as misdemeanor charges for criminal possession of a controlled substance in the seventh degree and criminal facilitation in the fourth degree. JD Blue was charged, as a codefendant, with criminal sale in the third degree. Defendant opted for a bench trial in Supreme Court.

At the end of the People’s case, defense counsel moved to dismiss the sale count, asserting an agency defense. The court denied the motion but eventually decided that it would consider the agency doctrine during its deliberations. In her summation, defense counsel maintained that the application of agency negated the sale count, and also stated,

“The charge of criminal facilitation is on the indictment. It’s my argument that the agent of a buyer is no more guilty of facilitating the sale than a lone buyer since he would take the place of the buyer.”

Supreme Court found defendant not guilty of the felony sale count upon its determination that the People did not disprove the agency defense beyond a reasonable doubt. Defendant was, however, convicted of the misdemeanor facilitation and possession charges.

The Appellate Division, Second Department, affirmed (82 AD3d 1276 [2011]). It concluded that there was no indication that the trial court failed to consider the agency defense with respect to the facilitation count, and it viewed defendant’s argument as a veiled claim of a repugnant verdict based on the fact that defendant was acquitted of the sale but convicted of facilitation. However, the Appellate Division found the repugnancy challenge to be unpreserved and it declined to review the merits of such claim.

A Judge of this Court granted leave to appeal (18 NY3d 862 [2011]) and we now affirm, albeit for reasons different than those stated by the Appellate Division.

m

Defendant argues that he should have been acquitted of criminal facilitation once the trial court determined that the People failed to disprove the agency defense. He contends that the factual finding that he acted as the agent of a drug purchaser necessarily establishes that he acted solely in the interest of the buyer and not on behalf of the seller. In opposition, the People assert that the agency defense is relevant only to a charge of selling drugs and that it is possible for a person to act as the buyer’s agent while simultaneously aiding the seller’s ability to consummate a transaction.

As relevant in this appeal, a person commits the crime of criminal facilitation in the fourth degree “when, believing it probable that he is rendering aid ... to a person who intends to commit a crime, he engages in conduct which provides such person with means or opportunity for the commission thereof and which in fact aids such person to commit a felony” (Penal Law § 115.00 [1]). The purpose of this provision is to assign criminal culpability to an individual who “knowingly aid[s] the commission of a crime” but “does not necessarily possess the ‘mental culpability’ required for the commission of the crime and is therefore not within the statutory definition of an accomplice” (William C. Donnino, Practice Commentary, McKinney’s Cons Laws of NY, Book 39, Penal Law § 115.00 at 180). Hence, the fact that the “defendant himself is not guilty of the felony [drug sale] which he facilitated because he did not act with the intent or other culpable mental state required for the commission thereof’ is not a defense to facilitation (Penal Law § 115.10 [3]).

From a textual perspective {see e.g. People v Suber, 19 NY3d 247, 252 [2012]), the facilitation statute plainly was intended to cover the type of conduct engaged in by defendant: he brought the undercover officer to JD Blue and provided the dealer with the opportunity to intentionally sell cocaine, thereby aiding the commission of that felony {see Penal Law § 115.00 [1]). This view of the statute’s purpose is consistent with the ordinary meaning of “facilitate,” which commonly refers to “the efforts of someone other than a primary or necessary actor in the commission of a substantive crime” (Abuelhawa v United States, 556 US 816, 820 [2009])—that is, a third party like defendant who was integral to the drug transaction (cf. People v Gordon, 32 NY2d 62, 65-66 [1973]). In addition, the “agency defense is a well-established interpretation of the statutory definition of the term ‘sell’ ” (People v Davis, 14 NY3d at 24 [internal quotation marks omitted]; see People v Andujas, 79 NY2d 113, 117 [1992]; People v Ortiz, 76 NY2d 446, 448-449 [1990]). However, “sale” or “sell” are not components of facilitation (see Penal Law § 115.00 [1]). As Penal Law § 115.10 (3) specifically states, the fact that defendant was neither an accomplice to the sale nor guilty of that crime does not provide a defense to facilitation.

There are at least several additional reasons why agency is not a defense to facilitating a drug sale. As discussed earlier, the underlying purpose of the agency doctrine was to reduce the criminal culpability of a buyer’s agent from a serious felony punishable by a mandatory indeterminate life sentence to the more lenient punishments imposed for possessory offenses (see People v Ortiz, 76 NY2d at 449). Here, in contrast, defendant’s facilitation and possession offenses are both classified as class A misdemeanors, so the “calibration of punishment set by the legislature” (Abuelhawa v United States, 556 US at 820) is balanced and application of the agency doctrine is not required as a matter of fundamental fairness. We have also recognized that the “agency defense is not a complete defense” (People v Lam Lek Chong, 45 NY2d at 74) because “it acknowledges [the] defendant’s wrongdoing” in participating in a drug deal (People v Davis, 14 NY3d at 24). It would be incongruous to allow a facilitator, who clearly acts as the buyer’s conduit to the drug seller and actively participates in the consummation of the transaction, to escape all criminal liability as long as that person never touches the drugs. In short, such a fact pattern presents a classic example of criminal facilitation under the Penal Law.

Based on the plain language of the facilitation statutes and the historic rationale underlying the agency doctrine, we hold that agency may not be interposed as a defense to a charge of criminal facilitation. Defendant was therefore properly convicted of that offense.

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

Chief Judge Lippman (dissenting).

The “thrust” of New York statutes, as “consistently construed, is not directed against purchasers” (People v Roche, 45 NY2d 78, 82-83 [1978], cert denied 439 US 958 [1978]), and buyers are not considered accomplices of the seller despite their “key position in the drug cycle” (People v Lam Lek Chong, 45 NY2d 64, 73 [1978], cert denied 439 US 935 [1978]). Likewise, the agency defense originated due to the understanding that leniency should be shown to low-level conduits, acting on behalf of purchasers with limited intent, and who are assuredly not “tycoons of the trade” (see Lam Lek Chong, 45 NY2d at 74). We recognized in Roche that buyers’ agents may not be “motivated by a criminal disposition” but rather are often gripped by addiction or attempting “to aid one so afflicted” (45 NY2d at 83). Therefore, these policy concerns militate in favor of the conclusion that the agency defense applies to criminal facilitation of a drug sale.

The majority finds that the agency defense applies only to a criminal sale and not to facilitation because of the harsh penalties imposed for selling narcotics under the Rockefeller Drug Laws, while facilitation is only a misdemeanor. The fact that facilitation is not a felony should not alter our analysis. While the stringent and inflexible penalties for the sale of drugs may have been the impetus for preserving the agency defense, the defense both predated the imposition of the Rockefeller Drug Laws (see Lam Lek Chong, 45 NY2d at 73) and survived their mitigation by the Drug Law Reform Act (see majority op at 186-187). The severity of the punishment does not change the underlying rationale for the agency defense. We stated plainly in Roche that “an individual who participates in such a transaction solely to assist a buyer and only on his behalf, incurs no greater criminal liability than does the purchaser he aids and from whom his entire standing in the transaction is derived” (45 NY2d at 83). Where a court has determined that defendant acted solely in the interests of the buyer, as here, he cannot be guilty of also aiding the seller.

The defendant here was acquitted of a narcotics sale by the trial court on the express basis that defendant was an agent of the buyer. The U.S. Supreme Court found that a buyer does not “facilitate” a drug transaction (Abuelhawa v United States, 556 US 816, 819-820 [2009]), and a buyer cannot be prosecuted for criminal facilitation of a sale, even though the buyer knows he or she is rendering aid to the seller, provides the “means or opportunity,” and makes the drug transaction possible (see Penal Law § 115.00 [1]). As such, an agent acting as the buyer’s proxy cannot be guilty of facilitating a criminal sale of drugs as he is acting on behalf of a party who has been absolved of the crime of facilitation. We held in People v Andujas that “[t]he [agency] defense simply reflects the logical proposition that if a defendant is acting solely in a capacity which is inherently inconsistent with being a seller—i.e., acting as an agent for the buyer—he cannot be a seller” (79 NY2d 113, 118 [1992]).

The majority takes the contradictory position that an intermediary can be aligned solely with the buyer and provide no aid to the seller for the purposes of the sale, while simultaneously being guilty of criminally facilitating the seller. Both a buyer and his agent cannot be guilty of aiding the seller given our common-law holdings and the legislature’s decision to leave the “agency defense inviolate” (Roche, 45 NY2d at 84). We recognized in Roche that “[the legislature’s] acceptance of the [agency] defense represents a calculated and ameliorative judgment not to impose such penalties upon a person who merely facilitates the acquisition of drugs by a purchaser” {id.).

Furthermore, the majority’s holding implies that an intermediary of the buyer and seller who requests an agency defense charge will automatically be deemed guilty of criminal facilitation. Asking for an agency charge, in some ways, is an admission by the defendant that he or she played a role in the drug transaction and that, in itself, may be enough for a jury to determine that the defendant facilitated the sale of drugs. This result conflicts with the determination that a defendant who is deemed an agent of the buyer stands in the shoes of the buyer and cannot be more culpable under the law (see Roche, 45 NY2d at 83).

Consistent with our previously stated rationale for the agency defense, I would reverse defendant’s conviction for criminal facilitation; therefore, I respectfully dissent.

Judges Ciparick, Read, Smith and Pigott concur with Judge Graffeo; Chief Judge Lippman dissents and votes to reverse in an opinion.

Order affirmed.

      . JD Blue was acquitted by a jury.

      . Unlike the Appellate Division, we conclude that this issue is preserved for review. In the factual context of this bench trial, defense counsel’s specific assertion that “the agent of a buyer is no more guilty of facilitating the sale than a lone buyer since he would take the place of the buyer” was sufficient to bring the legal issue to the trial court’s attention prior to deliberations (see CPL 470.05 [2]).

      . The main flaw in the dissent’s analysis is that it does not properly consider the actual language of the governing statutes or recognize that the agency doctrine is premised on an interpretation of a term of art—“sell”— that is not an element of facilitation’s statutory definition. Moreover, the fact that a buyer cannot be convicted of facilitation (see e.g. Abuelhawa v United States, 556 US at 820) is not dispositive regarding the culpability of a third party—defendant in this case—without whom the drug sale would not have been possible.

      . Although defendant was convicted of both facilitation and possession, he was effectively sentenced to “time served” when Supreme Court imposed concurrent one-year jail terms.

      . The majority’s concern that agents of the buyer who never handle the drugs can escape all criminal liability did not alarm courts who first applied the agency defense when criminal facilitation was not even a statutory offense (see e.g. People v Lindsey, 12 NY2d 958 [1963], affg 16 AD2d 805 [2d Dept 1962]).

      . The absence of the term “sell” from the facilitation statute offers no support to the majority, and one would not expect “sell” to be there. Moreover, any offense, including the sale of narcotics, can be substituted for the term “crime” in the text of the statute (see Penal Law § 115.00).


author: Read, J. Chief Judge Lippman (dissenting).

text:
    [981 NE2d 273, 957 NYS2d 677]
    Aleksey Guryev, Appellant, v Gregory Tomchinsky et al., Defendants, and 200 Riverside Boulevard at Trump Place et al., Respondents.
    Argued November 14, 2012;
    decided December 11, 2012

      POINTS OF COUNSEL

      Arze & Mollica, LLP, Brooklyn (Raymond J. Mollica of counsel), for appellant.
    I. Defendants/respondents are “owners” or “agents of owners” pursuant to the Labor Law. (Mangiameli v Galante, 171 AD2d 162; Wendel v Pillsbury Corp., 205 AD2d 527; Copertino v Ward, 100 AD2d 565; Sweeting v Board of Coop. Educ. Servs., 83 AD2d 103; Nowak v Smith & Mahoney, 110 AD2d 288; Gordon v Eastern Ry. Supply, 82 NY2d 555; Williams v LeChase, 15 AD3d 988; Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494; Allen v Cloutier Constr. Corp., 44 NY2d 290; Zimmer v Chemung County Performing Arts, 65 NY2d 513.) II. Defendants/respondents “acted in the capacity of an owner” for the purposes of the Labor Law. (Mangiameli v Galante, 171 AD2d 162; Abbatiello v Lancaster Studio Assoc., 3 NY3d 46; Morton v State of New York, 15 NY3d 50; Gordon v Eastern Ry. Supply, 82 NY2d 555; Sperber v Penn Cent. Corp., 150 AD2d 356; Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530; Williams v LeChase, 15 AD3d 988; Phillips v Eastman Kodak Co., 204 AD2d 979; Zaher v Shopwell, Inc., 18 AD3d 339; Copertino v Ward, 100 AD2d 565.) III. The decision of the Appellate Division thwarts the purpose of the Labor Law. (Zimmer v Chemung County Performing Arts, 65 NY2d 513; Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530; Ross v Curtis-Palmer Hydro-Elec. Co., 81 NY2d 494; DeSabato v 674 Carroll St. Corp., 55 AD3d 656; Maciejewski v 975 Park Ave. Corp., 37 AD3d 773; Sperber v Penn Cent. Corp., 150 AD2d 356.)

      Cartafalsa, Slattery, Turpin & Lenoff, New York City (Robert H. Fischler and B. Jennifer Jaffee of counsel), for respondents.
    I. Condominium defendants are not owners of Gregory and Marina Tomchinskys’ unit or agents of owners pursuant to the Labor Law simply by virtue of owning the land and the common elements, since the Tomchinskys owned their unit in fee simple absolute. (Scaparo v Village of Ilion, 13 NY3d 864; Abbatiello v Lancaster Studio Assoc., 3 NY3d 46; Sanatass v Consolidated Inv. Co., Inc., 10 NY3d 333; Celestine v City of New York, 86 AD2d 592, 59 NY2d 938; Gordon v Eastern Ry. Supply, 82 NY2d 555; Coleman v City of New York, 91 NY2d 821; Williams v LeChase, 15 AD3d 988; Phillips v Eastman Kodak Co., 204 AD2d 979; Sperber v Penn Cent. Corp., 150 AD2d 356; Mangiameli v Galante, 171 AD2d 162.) II. The condominium defendants did not act in the capacity of an owner for the purposes of the Labor Law. (Mangiameli v Galante, 171 AD2d 162; Scaparo v Village of Ilion, 13 NY3d 864; Copertino v Ward, 100 AD2d 565; Reisch v Amadori Constr. Co., 273 AD2d 855; Zaher v Shopwell, Inc., 18 AD3d 339; Bart v Universal Pictures, 277 AD2d 4; Grilikhes v International Tile & Stone Show Expos, 90 AD3d 480; Lacey v Long Is. Light. Co., 293 AD2d 718; Lynch v City of New York, 209 AD2d 590; Wendel v Pillsbury Corp., 205 AD2d 527.) III. Condominium associations must not be treated like cooperative apartment corporations for the purpose of ownership under the Labor Law. (Frisch v Bellmarc Mgt., 190 AD2d 383; Matter of Levandusky v One Fifth Ave. Apt. Corp., 75 NY2d 530; All Seasons Resorts v Abrams, 68 NY2d 81; DeSabato v 674 Carroll St. Corp., 55 AD3d 656; Maciejewski v 975 Park Ave. Corp., 37 AD3d 773, 8 NY3d 815; Valdovinos v Shore Rd. Apt. Corp., 24 Misc 3d 1204[A], 2009 NY Slip Op 51252[U]; Celestine v City of New York, 59 NY2d 938; Gordon v Eastern Ry. Supply, 82 NY2d 555; Coleman v City of New York, 91 NY2d 821; Sanatass v Consolidated Inv. Co., Inc., 10 NY3d 333.)
   OPINION OF THE COURT

Read, J.

Defendants Gregory and Marina Tomchinsky own a residential apartment at 200 Riverside Boulevard at Trump Place, a 47-story building located in Manhattan, which is organized as a condominium (see Real Property Law art 9-B [Condominium Act]). The other defendants in this action are the condominium; its Board of Managers (the Board), the entity responsible for the building’s day-to-day operation and management; and the Trump Corporation (Trump), the Board’s managing agent (collectively, the condominium defendants).

In 2007, the Tomchinskys sought to renovate their apartment before moving in. The Board approved the project, as required by the condominium’s bylaws, subject to the terms and conditions of an Alteration Agreement entered into by Mr. Tomchinsky, as unit owner, and the Board, as agent for the building’s other unit owners. The Tomchinskys hired defendant YZ Remodeling, Inc. (YZ) to perform the work. Plaintiff Aleksey Guryev, an employee of YZ, was allegedly injured while using a nail gun to install base moldings in the apartment when a nail ricocheted and struck his eye.

This action against the condominium defendants, as well as the Tomchinskys and YZ, followed in December 2008. Plaintiff asserted causes of action to recover damages for common-law negligence and violations of Labor Law §§ 200 and 241 (6). He based his claim under section 241 (6) on Industrial Code rule 23-1.8 (a) (12 NYCRR 23-1.8 [a]), alleging that YZ failed to supply him with eye protection. All defendants answered; the Tomchinskys and the condominium defendants cross-claimed for indemnification from the other defendants.

YZ moved for summary judgment dismissing the complaint insofar as asserted against it, based upon the exclusive remedy afforded plaintiff under the Workers’ Compensation Law, and Guryev cross-moved for summary judgment on the issue of liability on his cause of action alleging a violation of Labor Law § 241 (6). The condominium defendants also cross-moved, asking for summary judgment dismissing the complaint and all cross-claims insofar as asserted against them. Supreme Court denied the motion and cross motions on the ground there were issues of fact; the condominium defendants appealed, and Guryev cross-appealed.

The Appellate Division reversed the order insofar as appealed from by the condominium defendants, granted their cross motion for summary judgment and otherwise affirmed (87 AD3d 612 [2d Dept 2011]). The court held that the condominium defendants were entitled to summary judgment because they “were not entities which ha[d] an interest in the property and who fulfilled the role of owner by contracting to have work performed for [their] benefit” (id. at 614 [internal quotation marks omitted]). The court reasoned that these defendants “did not determine which contractors to hire, and were not in a position to control the renovation work or to insist that proper safety practices were followed” (id.). We granted Guryev permission to appeal (18 NY3d 802 [2011]), and now affirm.

Labor Law § 241 (6) generally requires “owners and contractors and their agents for such work, except owners of one and two-family dwellings who contract for but do not direct or control the work,” to “provide reasonable and adequate protection and safety” for workers and to comply with specific safety rules promulgated by the Commissioner of the Department of Labor. The duty to comply with the Commissioner’s safety rules, which are set out in the Industrial Code (12 NYCRR), is nondelegable. The threshold issue on this appeal is whether the condominium defendants are “owners” or “agents of owners” of the Tomchinskys’ apartment. Plaintiff claims that they are, principally because the condominium owns the land beneath the building, and, he asserts, the Board and Trump are the condominium’s agents as a result. Plaintiff analogizes the facts here to those in Gordon v Eastern Ry. Supply (82 NY2d 555 [1993]), which he calls the “seminal case” in his favor.

In Gordon, the plaintiff brought suit under the Scaffold Law (Labor Law § 240 [1]), which specifies that “[a] 11 contractors and owners and their agents” engaged in cleaning a building or structure must furnish or erect proper scaffolding, ladders and similar safety devices to protect employees in the performance of work. Gordon was allegedly injured while cleaning the exterior of a railroad car with a hand-held sand blaster. Eastern Railway Supply, Inc. owned the “sandhouse” in which the cleaning was performed as well as the real property upon which the “sandhouse” was situated. Eastern, which had leased the real property to Ebenezer, a wholly owned subsidiary, took the position that it was not liable as an owner because it did not contract to have the sand blasting work performed, and the work was not undertaken for its benefit. Eastern further pointed out that it did not own the structure being cleaned—i.e., the railroad car. We held that Eastern was an owner, resting liability upon “the fact of ownership” of the real property, and noting additionally that the property was leased to Ebenezer to be used for cleaning and repairing railroad cars so that “[t]he very presence of the [railway car] on [Eastern’s] property was the direct result of [its] actions and established a sufficient nexus for liability to attach to it as an ‘owner’ ” (82 NY2d at 560).

In this case, there was no lessor-lessee relationship between the condominium and the Tomchinskys. Rather, the Tomchinskys owned their apartment or “unit” in fee simple absolute {see Real Property Law § 339-e [16] [defining “unit owner”]; see also id. § 339-h [“Each unit owner shall be entitled to the exclusive ownership and possession of his unit” (emphasis added)]). In short, the Tomchinskys’ apartment is real property separate and apart from the land beneath the condominium building, and plaintiffs accident occurred while he was working in their apartment. In Gordon, by contrast, the plaintiff injured himself while working on real property owned by Eastern, on a “structure,” also owned by Eastern, placed on the property as a result of its lease with Ebenezer. And since the Tomchinskys, not the condominium, own the Tomchinskys’ apartment, the Board and Trump are not the owner’s agents within the meaning of the Labor Law.

Alternatively, plaintiff argues that the condominium was an owner for purposes of Labor Law § 241 (6) by virtue of the mandatory Alteration Agreement entered into by Mr. Tomchinsky and the Board, a position echoed by the dissent. The Agreement’s provisions, however, simply reflect the Board’s interest in making sure that the proposed renovations were carried out in a way that safeguarded the integrity of the building, other units and common areas; complied with any permitting requirements; and inconvenienced other residents as little as possible. The Agreement did not vest the Board with authority to “determine which contractors to hire, . . . control the renovation work or . . . insist that proper safety practices [be] followed” (87 AD3d at 614; see also Mangiameli v Galante, 171 AD2d 162, 164 [3d Dept 1991] [condominium association is not an owner within the meaning of Labor Law § 241 (6) where “it did not own the property upon which plaintiff was to perform his work” and there was no “allegation that the (a)ssociation had either the authority to contract with plaintiffs employer to perform the work or the right to control the work”]).

It bears keeping in mind that Gordon and our other cases relied upon by plaintiff and the dissent stand for the proposition that “ownership of the premises where the accident occurred—standing alone—is not enough to impose liability under Labor Law § 241 (6) where the property owner did not contract for the work resulting in the plaintiffs injuries”; additionally, we have “insisted on some nexus between the [non-contracting] owner and the worker, whether by a lease agreement or grant of an easement, or other property interest” (Morton v State of New York, 15 NY3d 50, 56 [2010], citing Abbatiello v Lancaster Studio Assoc., 3 NY3d 46 [2004], and Scaparo v Village of Ilion, 13 NY3d 864 [2009] [internal quotation marks omitted]). In short, ownership is a “necessary condition” although “not a sufficient one” for a non-contracting party’s liability under section 241 (6) (id.), and the condominium did not own the Tomchinskys’ apartment. The Agreement between Mr. Tomchinsky and the Board does not reflect otherwise, as plaintiff and the dissent contend, or, more importantly, alter this fact.

Finally, plaintiff argues, and the dissent agrees, that, as a matter of public policy, condominiums and cooperative corporations should be treated similarly under the Labor Law because both are forms of “collective ownership.” Cooperative corporations have been held to be owners potentially liable under the Labor Law when a contractor’s employee is injured while performing construction work in an apartment within the building (see DeSabato v 674 Carroll St. Corp., 55 AD3d 656, 658-659 [2d Dept 2008]). Liability under the Labor Law as an owner, however, turns in every case on sometimes fine distinctions relating to ownership of the premises and control of the injury-producing work. And whereas condominium apartments are owned by individual unit owners (here, the Tomchinskys), a cooperative corporation owns an entire building, including the apartments where individual tenant-shareholders reside; the residents of these apartments own stock in the corporation, which grants them proprietary leases to occupy the space in the premises to which their shares are allocated (see generally Frisch v Bellmarc Mgt., 190 AD2d 383, 387 [1st Dept 1993] [“While some superficial aspects of condominium and cooperative ownership are similar . . . , the two forms of interest in real property are fundamentally different by design and as a matter of law”]).

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

Chief Judge Lippman (dissenting).

The condominium’s claim of non-liability is premised upon the circumstance that it is not the titleholder of the Tomchinsky unit. It is, in fact, undisputed that the Tomchinskys own the unit in fee, but that is not for Labor Law purposes the end of the inquiry. Of course, under the Labor Law title ordinarily suffices as a ground for statutory liability (but see Morton v State of New York, 15 NY3d 50 [2010]; Abbatiello v Lancaster Studio Assoc., 3 NY3d 46 [2004]). But, as the statute itself makes clear and we have accordingly recognized (see Scaparo v Village of Ilion, 13 NY3d 864, 866 [2009]), the absence of title does not necessarily dictate a contrary conclusion. The statute’s array of non-delegable duties are imposed not upon owners alone but also upon contractors and agents of owners—non-title holding entities. Moreover, we have recognized the principle that Labor Law “owner” liability may be imposed on non-owners where they have an interest in the property and have acted as owners in connection with contracting for improvements (see Scaparo, 13 NY3d at 866, citing Copertino v Ward, 100 AD2d 565, 566 [2d Dept 1984]). As has been observed, the critical factor in determining whether a party should be treated as an “owner” for Labor Law purposes is whether it retains the owner’s prerogative to insist upon compliance with proper safety practices (see Copertino, 100 AD2d at 567).

It is clear from the Alteration Agreement entered into by the condominium Board “as agent for the unit owners” and the Tomchinskys, that, notwithstanding the conveyance of a fee interest in the subject unit to the Tomchinskys, the condominium in fact continued to possess with respect to that unit certain prerogatives of ownership. Proposed alterations were subject to condominium approval, which could be withheld “in the Board’s sole and absolute discretion,” and the condominium was empowered to require the amendment of unit owners’ plans with an architect of its own choosing. In addition, the condominium reserved to itself plenary power to veto the unit owner’s choice of contractors and the right to select contractors in certain commonly arising situations where the work within the unit would affect building systems. Particularly significant here is that provision of the agreement in which Board approval of a unit owner’s plans is conditioned upon the unit owner’s representation that “all Unit Owner’s work shall be performed strictly in accordance with the approved Plans and Specifications [and] comply with all applicable laws, ordinances, orders, rules, regulations and requirements.” The condominium, then, retained the power to insist upon compliance with the Industrial Code worker safety provisions, even within a residential unit nominally owned in fee by a different party. Indeed, the Alteration Agreement reflects a reservation by the condominium of a right to reentry “for the purpose of inspecting Unit Owner’s Work to ensure that Unit Owner’s Work is being performed, and has been performed, in accordance with the Plans and Specifications and this Agreement” (emphasis supplied), and further provides that the condominium at its “sole and absolute discretion” is entitled to stop work for breach of any of the agreement’s covenants, including, of course, that in which the unit owner promised compliance with “all applicable laws, ordinances, orders, rules, regulations and requirements.”

The condominium defendants concede, as they must, that “the [condominium] Board certainly dictated the terms under which the work [in the Tomchinsky unit] would be performed” (brief for defendants-respondents at 29), but contend that they may not be deemed Labor Law “owners” because, under the Alteration Agreement, it was the unit owner that was primarily responsible for assuring compliance with applicable work site safety regulations. But this only begs the question whether the condominium defendants, in light of the proprietary powers they evidently reserved, are “owners.” If they are, it makes no difference that they purported to contract their responsibilities to the unit fee owners, for those owner responsibilities are nondelegable (Rocovich v Consolidated Edison Co., 78 NY2d 509, 513 [1991]). Indeed, as we observed in Sanatass v Consolidated Inv. Co., Inc. (10 NY3d 333, 342 [2008]), “[t]o allow owners to [contract out of the statute] . . . would eviscerate the strict liability protection afforded by the Labor Law.” Inasmuch as it would appear that the role the condominium reserved to itself in the unit alteration process was that of an owner—or at the very least that of the owners’ agent—it was for Labor Law purposes a statutorily responsible party. And, given that status, it cannot be useful for the condominium to claim that it delegated its owner responsibilities or that it did not actually direct and control the work resulting in plaintiff’s injury (see Rocovich). It is a hallmark of the Labor Law’s strict liability scheme that a party will be deemed responsible based simply upon its proprietary capacity to require compliance with worker safety laws and regulations; if that capacity exists, actual supervision and control of the work site is unnecessary (see Gordon v Eastern Ry. Supply, 82 NY2d 555, 559 [1993]).

It is obvious that a condominium does in fact retain a propriety interest in its owners’ units every bit as palpable in the unit alteration context as that of a residential cooperative corporation and that there exists no rationale for treating the two kinds of entities differently when it comes to allocating responsibility under the Labor Law. It is to blink at reality to treat condominiums simply as agglomerations of one-family dwellings, as this Court now does. The consequence of such a studied elevation of form over substance is dramatically to reduce the Labor Law’s protective ambit: a construction laborer injured while working in a condominium unit now has no Labor Law cause of action against the unit owner by reason of the single dwelling exemption, no claim against his contractor employer by reason of the workers’ compensation defense, and no statutory claim against the condominium because it is not the title owner of the unit. The statute would apply to workers frequently employed in the tens of thousands of condominium units in this State, if at all, only haphazardly—where, for example, there was a non-employer contractor with supervisory responsibility on the site (but even under that scenario a workers’ compensation defense might be available). Plainly, this was not what the legislature had in mind when it amended the Labor Law (L 1969, ch 1108, § 1) to place non-delegable, strictly enforceable protective duties on “[a] 11 contractors and owners and their agents” (Labor Law §§ 240, 241 [as amended]) so as to situate “ ‘ultimate responsibility for safety practices at building construction jobs where such responsibility actually belongs, on the owner and general contractor’ rather than on the workers themselves (Mem of Senator Calandra and Assemblyman Amann, 1969 NY Legis Ann, at 407)” (Sanatass, 10 NY3d at 338; see also Gordon).

It is true, of course, that the Labor Law exempts owners of single-family dwellings from its strict liability provisions, but that exemption could not, consistent with the Labor Law’s broad remedial purpose, have been intended to shield from statutory “owner” responsibility entities retaining significant construction related proprietary powers as to the numerous structurally interconnected units under their aegis. The court’s conclusion to the contrary rips a gaping hole in the Labor Law’s protective mantle—one that the legislature will have to mend if the statutory scheme is not to be rendered utterly arbitrary in its application and largely inefficacious in meeting its vaunted objectives.

Accordingly, I dissent. The order of the Appellate Division should, in my view, be reversed and plaintiffs Labor Law § 241 (6) claim reinstated.

Judges Graffeo, Smith and Pigott concur with Judge Read; Chief Judge Lippman dissents and votes to reverse in a separate opinion in which Judge Ciparick concurs.

Order affirmed, with costs.

      . Ms. Tomchinsky did not sign the Agreement.

      . The dissent rather curiously suggests that the Board was also acting as the Tomchinskys’ agent when it entered into the Agreement with Mr. Tomchinsky (see dissenting op at 202-203, 203-204)—i.e., that Mr. Tomchinsky somehow contracted with himself.

      . This provision requires the furnishing of eye protection equipment to employees who are “engaged in any . . . operation which may endanger the eyes.” (Id.) YZ’s owner claims that he provided goggles, which Guryev failed to use.

      . According to the condominium defendants, Supreme Court granted YZ’s motion in a separate order handed down the same day as the order appealed from.

      . The Appellate Division’s order disposed of all claims by or against the condominium defendants, rendering it final as to them.

      . Subsequent to the Appellate Division’s decision, Supreme Court granted the Tomchinskys summary judgment dismissing plaintiffs complaint as asserted against them on the basis of the one- and two-family homeowner’s exception.

      . The section of the Agreement between Mr. Tomchinsky and the Board relating to his obligations prior to commencement of work required him to cause preparation of plans and specifications, generally subject to the Board’s approval. Concomitantly, he was
      “responsible for assuring that (i) the Plans and Specifications and all modifications thereto and (ii) all Unit Owner’s Work shall be performed strictly in accordance with the approved Plans and Specifications, comply with all applicable laws, ordinances, orders, rules, regulations and requirements (collectively, ‘Legal Requirements’) of all governmental and quasi-governmental authorities and boards of fire underwriters having jurisdiction thereof (collectively, ‘Governmental Authorities’) [sic].”
      The dissent characterizes this provision as “[p]articularly significant” in that it shows that “[t]he condominium . . . retained the power to insist upon compliance with the Industrial Code worker safety provisions, even within a residential unit nominally owned in fee by a different party” (dissenting op at 203). Of course, the Tomchinskys did not “nominally” own their apartment in fee. As noted previously, they owned their apartment in fee simple absolute (see Real Property Law § 339-e [16]), and were “entitled to the exclusive ownership and possession” of it (see Real Property Law § 339-h [emphasis added]). Accordingly, the Board did not possess any “power” with respect to ownership of the Tomchinskys’ apartment that it might have “retained.” Putting this aside, it is quite a leap of logic to conclude that the Board assumed responsibility for making sure the Tomchinskys’ contractor performed work in compliance with the Industrial Code by virtue of a provision relating to Mr. Tomchinsky’s responsibility to assure that this work was performed in accordance with the approved plans and specifications and legal requirements related thereto.