author: CIPARICK, J.

text:
    [864 NE2d 600, 832 NYS2d 470]
    Joseph A. Bradley, Appellant, v Earl B. Feiden, Inc., et al., Respondents. General Electric Company, Inc., Third-Party Plaintiff-Respondent, v North American Sankyo Corporation, Also Known as NASCorp, Third-Party Defendant, and Mid-South Electronics, Inc., Third-Party Defendant-Appellant.
    Argued January 2, 2007;
    decided February 20, 2007

      POINTS OF COUNSEL

      Friedman, Hirsehen & Miller, LLP, Albany (Lynn M. Blake of counsel), for appellant.
    I. The Appellate Division committed reversible error by deciding the underlying legal issues, because defendants failed to timely and properly object to the special verdict sheet, the jury charge and the alleged inconsistent verdict. (Hunt v Bankers & Shippers Ins. Co. of N.Y., 50 NY2d 938; Caprara v Chrysler Corp., 71 AD2d 515, 52 NY2d 114; Barry v Manglass, 55 NY2d 803; Delaney v Philhern Realty Holding Corp., 280 NY 461.) II. The Appellate Division committed reversible error by reversing the trial court’s denial of defendants’ posttrial motion and dismissing plaintiff’s complaint. (Cohn v Lionel Corp., 21 NY2d 559; Ribley v Harsco Corp., 57 AD2d 234; Denny v Ford Motor Co., 87 NY2d 248; Wojcik v Empire Forklift, Inc., 14 AD3d 63.)

      Thuillez, Ford, Gold, Johnson & Butler, LLP, Albany (Donald P. Ford, Jr., of counsel), for third-party appellant.
    I. General Electric Company is not entitled to contractual indemnification. (Voss v Black & Decker Mfg. Co., 59 NY2d 102; Liriano v Hobart Corp., 92 NY2d 232; Margolin v New York Life Ins. Co., 32 NY2d 149; Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153; Rodriguez v Baker, 91 AD2d 143; Niagara Frontier Transp. Auth. v Tri-Delta Constr. Corp., 107 AD2d 450; Gross v Sweet, 49 NY2d 102; Consolidated Gas Supply Corp. v Matula, 42 AD2d 656; Kowalczyk v Flintkote Co., 91 Misc 2d 62; Sprung v MTR Ravensburg, 99 NY2d 468.) II. General Electric Company seeks indemnification for the alleged fault of both General Electric and North American Sankyo Corporation. (Margolin v New York Life Ins. Co., 32 NY2d 149; Levine v Shell Oil Co., 28 NY2d 205; Niagara Frontier Transp. Auth. v Tri-Delta Constr. Corp., 107 AD2d 450; Hooper Assoc. v AGS Computers, 74 NY2d 487.) III. The jury verdict precludes indemnification for defense costs. (Viacom Inc. v Philips Elecs. N. Am. Corp., 16 AD3d 215; Brasch v Yonkers Constr. Co., 306 AD2d 508; Rodriguez v Savoy Boro Park Assoc. Ltd. Partnership, 304 AD2d 738; Medina v New York El. Co., 250 AD2d 656; Cannavale v County of Westchester, 158 AD2d 645; State of New York v Syracuse Rigging Co., 249 AD2d 758; International Paper Co. v Continental Cas. Co., 35 NY2d 322; Hotel des Artistes, Inc. v General Acc. Ins. Co. of Am., 9 AD3d 181.) IV. The court improperly denied the motion for summary judgment for any claims of indemnity arising after the verdict. (McGregor v Dimou, 101 Misc 2d 756.)

      Goldberg Segalla LLP, Buffalo (John P. Freedenberg of counsel), for respondents.
    I. The Appellate Division correctly granted defendants’ posttrial motion for a directed verdict. (Cohen v Hallmark Cards, 45 NY2d 493; Szczerbiak v Pilat, 90 NY2d 553; Clarke v Helene Curtis, Inc., 293 AD2d 701; Tardella v RJR Nabisco, 178 AD2d 737; Rosado v Proctor & Schwartz, 66 NY2d 21; Codling v Paglia, 32 NY2d 330; Henry v General Motors Corp., Chevrolet Motor Div., 201 AD2d 949; McArdle v Navistar Intl. Corp., 293 AD2d 931; Denny v Ford Motor Co., 87 NY2d 248; Fritz v White Consol. Indus., 306 AD2d 896.) II. The Appellate Division correctly found that Mid-South Electronics, Inc. is contractually obligated to indemnify defendants for defense costs. (Levine v Shell Oil Co., 28 NY2d 205; Hogeland v Sibley, Lindsay & Curr Co., 42 NY2d 153; Drzewinski v Atlantic Scaffold & Ladder Co., 70 NY2d 774; Kay-Bee Toys Corp. v Winston Sports Corp., 214 AD2d 457; DiPerna v American Broadcasting Cos., 200 AD2d 267; Breed, Abbott & Morgan v Hulko, 139 AD2d 71; Torres v Morse Diesel Intl., Inc., 14 AD3d 401; Brown v Two Exch. Plaza Partners, 76 NY2d 172; Barnes v New York Mercantile Exch., 7 AD3d 304; Santos v BRE/Swiss, LLC, 9 AD3d 303.)
   OPINION OF THE COURT

CIPARICK, J.

At issue in this appeal is whether legally sufficient evidence exists to support the jury’s verdict in favor of plaintiff on a breach of warranty claim against the manufacturer and retailer of a refrigerator unit, in light of the jury also finding for the manufacturer on a related products liability claim. Additionally, we are asked to determine if the supplier of the bracket control assembly component of the refrigerator is contractually required to indemnify the manufacturer. We answer both questions in the affirmative.

In early October 2000, plaintiff, Joseph Bradley, purchased a new General Electric Hotpoint refrigerator from defendant Earl B. Feiden, Inc. (Feiden), an appliance retailer. The refrigerator was manufactured by General Electric Company (GE) with a freezer on the top and a fresh food compartment on the bottom. Three weeks later, on the afternoon of October 27, 2000, a fire broke out in plaintiffs kitchen causing damage to his home. Approximately 15 firefighters responded to the scene and, once the fire was extinguished, a crew of investigators remained to probe its cause.

A preliminary Fire Investigation Report was prepared that day by the Fire Department’s investigators. The report form lists “kitchen refrigerator/freezer” as the “Origin of Fire.” The “Investigator’s Remarks” segment of the report states: “Origin of fire in area inside freezer unit of refrigerator. Fire extended to cabinet/overhead area which extended to kitchen area and attic. Heat and smoke damage throughout.” A basic fire incident report was filed the same day listing “refrigerator/freezer” as the source of the fire.

Plaintiff subsequently commenced a property damage action against defendants, GE and Feiden, alleging three separate causes of action — negligence, strict products liability and breach of implied warranty of merchantability under UCC 2-314 (2) (c). GE, in turn, filed a third-party action against North American Sankyo Corporation (NASCorp) and Mid-South Electronics, Inc. (Mid-South). The third-party complaint sought common-law indemnification from NASCorp, the manufacturer of the defrost timer, and contractual indemnification from Mid-South, producer and supplier of the bracket control assembly that incorporated the defrost timer.

At trial on the question of liability, plaintiff and three witnesses testified — firefighter/investigator Wayne Hamilton, forensic consultant David Redsicker and engineer Robert Vasilow. Hamilton, a 15-year veteran of the Cohoes Fire Department, testified, that, from his firsthand investigation he believed “the point of origin was in the interior of the freezer, in the refrigerator-freezer unit” based in part on the “extreme amount of burn” in and around the freezer compartment. Redsicker testified that he had examined and determined the origin of over 2,500 fires. Based on his investigation of the subject fire, which included an on-site visit to plaintiff’s home, he opined that the point of origin of the fire was the “refrigerator-freezer.” This was evident by the high concentration of “charring” and damage in and around the freezer unit. Redsicker further ruled out the can opener as the source of the fire, as proffered by the defense, as that appliance was located near many combustible objects that were not badly damaged by the fire.

Vasilow, a coemployee of Redsicker, examined the refrigerator/ freezer as well as various other artifacts, including the can opener, in his laboratory. Based on his review of an x-ray of the refrigerator’s defrost timer (which he believed showed a blown fuse and melted wire) as well as his examination of other related objects, he opined that the fire was caused by the defrost timer failing to perform as intended. Specifically, he stated that the defrost timer malfunctioned which resulted in excessive heating of the coils, the melting of the insulation and the ignition of the fire. On cross-examination, Vasilow conceded that he never dismantled the defrost timer or compared it to an exemplar.

At the conclusion of plaintiffs case-in-chief, GE moved for a directed verdict, arguing that the “proof was insufficient to meet [plaintiffs] burden.” The court denied the motion and GE proceeded to call its two witnesses, Donald Hoffmann and James Allison. Hoffmann, an engineer, testified that he obtained an exemplar defrost timer, took x-rays in a similar manner as did Vasilow, compared the two and found no difference. He further testified that he examined the actual defrost timer and believed it to be functional. He opined that the fire did not originate from the defrost timer, but rather, based on evidence of electrical arcing in the can opener, likely started after an unknown impetus caused the can opener’s switch to close, allowing the motor to overheat. Allison, a former GE engineer, testified that the defrost timer is tested throughout the design and production phases and must pass both Underwriters Laboratories’ safety requirements and a more comprehensive set of in-house tests; had there had been a defect in the defrost timer it would have been detected a “[h]undred percent of the time.”

At the close of its case, GE renewed its motion for a directed verdict, arguing that “[t]he proof simply has not been presented by the Plaintiff and the testimony is now overwhelmingly in favor of a directed verdict on behalf of the defense.” The court reserved judgment and the jury was given separate charges on strict products liability and breach of warranty. The jury was also given a special verdict sheet with the following five questions:

“Did the fire that occurred on October 7, 2000 at 4 Carl Place, Cohoes, New York originate in the General Electric refrigerator/freezer? . . .
“Was the defrost timer installed in the General Electric refrigerator/freezer defective? . . .
“Was the defect in the defrost timer installed in the General Electric refrigerator/freezer a substantial contributing factor in causing the fire that occurred on October 7, 2000 at 4 Carl Place, Cohoes, New York? . . .
“Did General Electric breach its warranty in that the refrigerator/freezer was not reasonably fit for its intended purpose? . . .
“Was the breach of warranty by General Electric a substantial contributing factor in causing the fire that occurred on October 7, 2000 at 4 Carl Place, Cohoes, New York?”

GE did not object to the jury charge or the verdict sheet.

During deliberations, the jury asked the court: “For us to find for the Plaintiff, do we have to agree that the defrost timer was at fault, or do we just have to say that the origin of the fire was the freezer?” The court responded by reading back the charges on strict products liability and breach of warranty. The court further instructed the jury that, even if it determined that the defrost timer was not defective or that the defect was not a substantial cause of the fire, it should proceed to consider plaintiffs claim for breach of warranty. In response, GE argued that a jury finding that there was no defect with the defrost timer but nevertheless a breach of implied warranty would be unsustainable based on speculation. The jury then reached a verdict in which it held in favor of GE on the products liability claim but found for plaintiff on the breach of warranty claim. The jury answered the first question on the special verdict sheet “Yes” and the second question “No”; it left the third question unanswered as academic and answered the fourth and fifth questions “Yes.”

Only after the jurors were discharged did GE renew its motion for a directed verdict on sufficiency grounds and also seek to set aside the verdict as irreconcilable. Separately, GE also made a motion for summary judgment against Mid-South on the contractual indemnification claim. Mid-South responded with a cross motion seeking summary judgment dismissing the indemnification claim. Supreme Court denied GE’s motions for a directed verdict and to set aside the verdict but granted its motion for defense costs and attorney fees in an amount to be determined. Both GE and Mid-South appealed. The Appellate Division, with two Justices dissenting, reversed Supreme Court’s denial of GE’s posttrial motion and dismissed the complaint stating:

“inasmuch as it appears that there exists no valid line of reasoning or permissible inferences that could lead rational persons to conclude that the refrigerator was not defective, yet was nevertheless not fit to be used for its ordinary purposes on the date of the fire, we are constrained to conclude that Supreme Court erred in not granting defendants’ posttrial motion seeking dismissal of the complaint” (30 AD3d 709, 714 [2006]).

The Court then affirmed, also with two Justices dissenting, the trial court’s grant of summary judgment to GE on the contractual indemnification claim. Plaintiff now appeals as of right under CPLR 5601 (a) and Mid-South appeals by permission of the Appellate Division under CPLR 5602 (b), a question having been certified to us by that Court.

GE raised various objections to the sufficiency of plaintiffs proof throughout the proceeding but never objected to the jury instructions or the special verdict sheet. GE’s sufficiency argument must therefore be examined in light of the language of the jury instructions and verdict sheet, which became the law of the case (see Barry, 55 NY2d at 805). Whether these instructions— which clearly tied the products liability claim to the defrost timer, but not the breach of warranty claim — were correct is not before us. Thus, under the law of the case, we are now called upon to determine if the Appellate Division erred in holding that the trial court should have granted GE’s motion for-a directed verdict based on insufficient evidence. To set aside a jury verdict on this basis, we must of course “conclude that there is simply no valid line of reasoning and permissible inferences which could possibly lead rational [persons] to the conclusion reached by the jury on the basis of the evidence presented at trial” (Cohen v Hallmark Cards, 45 NY2d 493, 499 [1978]).

For a breach of warranty of merchantability claim, to support a verdict for plaintiff, the jury needed to find that the product was not “fit for the ordinary purposes for which such goods are used” (UCC 2-314 [2] [c]; see also Denny v Ford Motor Co., 87 NY2d 248, 258-259 [1995]). Such a verdict may be sustainable solely on circumstantial evidence (cf. Speller v Sears, Roebuck & Co., 100 NY2d 38, 41 [2003] [product defects can be proved by circumstantial evidence “in the absence of evidence identifying a specific flaw”]).

The special verdict sheet given to the jury inquired as to whether the defrost timer in the refrigerator was defective as well as whether GE “breach[ed] its warranty in that the refrigerator/freezer was not reasonably fit for its intended purpose.” The jury unanimously rejected the claim that the defrost timer was defective given the conflicting evidence at trial but found that the subject product was not fit for its intended purpose.

Although the proof adduced at trial primarily focused on an alleged defect in the defrost timer, there was also evidence that the fire originated in the refrigerator/freezer. Specifically, the Fire Department reports admitted into evidence identified the refrigerator/freezer as the origin of the fire. Fire investigator Hamilton along with the forensic consultant Redsicker, the only witnesses who did on-site investigations, both testified that the fire had its roots in the freezer part of the unit. Surely, a jury could rationally conclude that such an appliance was not fit for its intended purpose, regardless of whether the defrost timer was defective, and thus that GE breached the implied warranty of merchantability.

The verdict sheet, as well as the jury instructions, specifically tied the strict products liability claim — but not the breach of warranty claim — to the defrost timer. Thus, a rational jury could have found that the defrost timer claim should be rejected, while also placing the source of the fire in the freezer. Since the jury was not asked whether the refrigerator was free from defect— only if the defrost timer was defective — the Appellate Division’s opinion that the jury could not rationally find that the refrigerator was not defective, yet was nevertheless not fit to be used for its ordinary purposes, cannot be sustained here. There was sufficient evidence presented to support the claim that the refrigerator was not fit for its ordinary purpose. Accordingly, the jury’s verdict should be reinstated and the matter remitted to the Appellate Division for review of the facts (see CPLR 5612, 5613, 5712).

Turning to the contractual indemnification claim, the contract between GE and Mid-South provides:

“(19) PRODUCT LIABILITY — Supplier shall protect, defend, hold harmless, indemnify and reimburse Buyer and its distributors, dealers, affiliates and customers, during the term of this Contract and thereafter from and against any liability, claim, cost, or expense . . . arising out of actual or alleged death or injury to any person, or damage to tangible property, by whomever suffered, or arising out of (a) any failure of Products to comply with applicable specifications (functional, design or otherwise), warranties, certifications under this Contract; or (b) the negligence of Supplier in design, manufacture or otherwise with respect to Products or parts therefor; or (c) claims based on strict or product liability relating to Product; or (d) failure to warn or inadequate warnings or instructions. Buyer reserves the right to settle all such claims at its own expense” (emphasis added).

The “Product” supplied by Mid-South was the bracket control assembly that included the defrost timer and related wiring. Plaintiff, in the underlying action, claimed that the defrost timer, admittedly part of Mid-South’s product, was defective. Given the verdict, the issue of indemnification here is limited to the defense costs of litigation.

A contract that provides for indemnification will be enforced as long as the intent to assume such a role is “sufficiently clear and unambiguous” (Rodrigues v N & S Bldg. Contrs., Inc., 5 NY3d 427, 433 [2005]). A court must also be careful not to interpret a contracted indemnification provision in a manner that would render it meaningless (see Levine v Shell Oil Co., 28 NY2d 205, 212 [1971]). When the intent is clear, an indemnification agreement will be enforced even if it provides indemnity for one’s own or a third party’s negligence (see e.g. Levine, 28 NY2d at 210, 213 [indemnification agreement which covered “any and all claims, suits, loss, cost and liability on account of injury or death of persons or damage to property” held enforceable to require operator of gas station to cover the owner of the station’s own negligence]; Gross v Sweet, 49 NY2d 102, 108 [1979] [“the law . . . will recognize an agreement to relieve one party from the consequences of his negligence on the strength of a broadly worded clause framed in less precise language than would normally be required” when the agreement is negotiated by sophisticated parties as an allocation of risk]).

Here, Mid-South agreed to defend and indemnify GE for all “claims based on strict or product liability relating to Product.” Since the defrost timer is a component of Mid-South’s product, the language of the indemnification agreement applies. Mid-South attempts to frame its assent as a product of an unequal bargaining position, as GE requires its vendors to accept the conditions before awarding a contract. As we stated in Levine, if the indemnitor “had reservations as to the scope of the agreement, he should have insisted on a different indemnification clause or refused to give his assent to the contract” (28 NY2d at 213). As the agreement is clear, unequivocal and unambiguous, the trial court properly granted summary judgment to GE finding that Mid-South is required to indemnify GE.

Mid-South argues that the jury’s verdict, finding no defect in the defrost timer, precludes indemnification. Under the parties’ agreement, indemnification was triggered by any “claims based on strict or product liability.” There was no requirement that the claim be successful in order to require indemnification of defense costs. The actual fault of the parties is irrelevant. However, since the jury found no defect in the defrost timer, Mid-South’s duty to defend and indemnify ended at the verdict and Supreme Court’s holding that Mid-South was responsible for all costs associated with defending this action to that point was proper.

Accordingly, the order of the Appellate Division should be modified, with costs to plaintiff against defendants, by reinstating the jury verdict and remitting to the Appellate Division for consideration of the facts and, as so modified, affirmed, with costs to third-party plaintiff General Electric Company against Mid-South Electronics, Inc. The certified question, limited to the third-party defendant-appellant’s appeal, should be answered in the negative.

Chief Judge Kaye and Judges Graffeo, Smith and Pigott concur; Judges Read and Jones taking no part.

Order modified, etc.

      . General Municipal Law § 204-d requires the chief of a fire department to determine the cause, if possible, of a fire and file a report indicating said cause. This report, the basic fire incident report, is filed with the State’s Fire Incident Reporting System.

      . To the extent that GE also claims that the jury verdict was inconsistent, that argument is unpreserved as it was not properly raised prior to discharge of the jury (see Barry v Manglass, 55 NY2d 803, 806 [1981]).


source: Caselaw Access Project

author: Ciparick, J.

license: Public Domain

text:
    [864 NE2d 611, 832 NYS2d 481]
    Betty Kolnacki, Respondent, v State of New York, Appellant.
    (Claim No. 103121.)
    Argued February 7, 2007;
    decided March 22, 2007

      POINTS OF COUNSEL

      Andrew Cuomo, Attorney General, Albany (Michael S. Buskus, Caitlin J. Halligan, Daniel Smirlock, Peter H. Schiff and Kathleen M. Treasure of counsel), for appellant.
    Claims that omit the ad damnum clause required by section 11 (b) of the Court of Claims Act are jurisdictionally deficient. (Alston v State of New York, 97 NY2d 159; Lichtenstein v State of New York, 93 NY2d 911; Dreger v New York State Thruway Auth., 81 NY2d 721; Lepkowski v State of New York, 1 NY3d 201; Long v State of New York, 7 NY3d 269; Trippe v Port of N.Y. Auth., 14 NY2d 119; Gates v State of New York, 128 NY 221; Buckles v State of New York, 221 NY 418; Butterfield v State of New York, 178 App Div 292; Thomann v City of Rochester, 256 NY 165.)

      Thomas Theophilos, Buffalo, for respondent.
    I. The trial court erred when it dismissed the claim on the grounds that the failure to include a specific dollar amount of damages therein rendered the claim jurisdictionally defective. (Lepkowski v State of New York, 1 NY3d 201; Barski v State of New York, 43 AD2d 767; Liberty Mut. Ins. Co. v State of New York, 121 AD2d 694; Harvey Chalmers & Son, Inc. v State of New York, 271 App Div 699, 297 NY 690; People v Santi, 3 NY3d 234; Matter of Schinasi, 277 NY 252; Surace v Danna, 248 NY 18; First Nat. Bank & Trust Co. v Beach, 301 US 435; Matter of Wilson v Board of Educ., Union Free School Dist. No. 23, Town of Oyster Bay, 39 AD2d 965; Matter of Statewide Roofing v Eastern Suffolk Bd. of Coop. Educ. Servs., First Supervisory Dist. of Suffolk County, 173 Misc 2d 514.) II. Any decision favorable to appellant with respect to the arguments included in point I of this brief should only be applied prospectively. (Chevron Oil Co. v Huson, 404 US 97; Gurnee v Aetna Life & Cas. Co., 55 NY2d 184; Lepkowski v State of New York, 1 NY3d 201; Morris v State of New York, 27 AD3d 282; Editorial Photocolor Archives v Granger Collection, 61 NY2d 517; Barski v State of New York, 43 AD2d 767; Liberty Mut. Ins. Co. v State of New York, 121 AD2d 694; Chalmers & Son v State of New York, 271 App Div 699; Otis El. Co. v State of New York, 52 AD2d 380.)
   OPINION OF THE COURT

Ciparick, J.

The issue presented by this appeal is whether claimant Betty Kolnacki’s failure to include the “total sum” of monetary damages in her claim, as required by Court of Claims Act § 11 (b), is a jurisdictional defect. We conclude that it is and that her claim must be dismissed.

Kolnacki commenced this suit seeking to recover for personal injuries sustained on July 8, 2000 as the result of a slip and fall at Artpark — a park in Western New York with outdoor theater facilities. Her claim indicates that she fractured her left patella and suffered dental damage, as well as other bruises and lacerations. The original claim was served on or about July 27, 2000, but was neither filed nor verified. Moreover, the claim did not state a specific dollar amount of damages. The State answered raising several affirmative defenses including, as relevant here, that “[t]he contents of the . . . Claim served herein do not comply with the provisions of Section 11 of the Court of Claims Act.”

Subsequently, Kolnacki served and filed a properly verified claim that, like the previous claim, did not contain a total amount of requested damages. Instead, the claim indicated that “[t]he full extent of claimant’s injuries [is] not yet known,” and that she had “incurred injuries, damages, medical and hospital expenses which are to date undetermined and will incur loss of earnings and impairment of health.” The verified bill of particulars likewise did not state the total sum claimed. The State orally moved to dismiss the claim, at the commencement of trial, for failure to comply with the requirements of section 11 (b) of the Court of Claims Act by omitting the amount of damages sought. The court denied the motion without prejudice to the State serving and filing a formal written motion in compliance with CPLR 2214.

After a trial on the issue of liability, the court found the State partially at fault. Thereafter, the State filed a written motion to dismiss the claim on the same basis as its previous oral motion — claimant’s failure to state the amount of damages. The court granted the State’s motion to dismiss, found that the failure to satisfy the requirements of section 11 (b) was a jurisdictional defect and rejected Kolnacki’s argument that substantial compliance with the statute was sufficient.

A majority of the Appellate Division reversed and reinstated the claim, finding that the extent of Kolnacki’s damages was difficult to determine and that she alleged sufficient information for the State to ascertain its potential liability. Two Justices dissented and voted to affirm, asserting that the requirements of section 11 (b) should be strictly construed and that the failure to state the total sum claimed was a jurisdictional defect. The Appellate Division granted the State’s motion for leave to appeal to this Court and certified the following question: “Was the order of this Court, entered April 28, 2006, properly made”? We reverse and answer the certified question in the negative.

Under section 8 of the Court of Claims Act, the State has waived its sovereign immunity from liability “provided the claimant complies with the limitations of this article [§§ 8-12].” The Act contains several conditions that must be met in order to assert a claim against the State. Specifically, “[t]he claim shall state the time when and place where such claim arose, the nature of same, and the items of damage or injuries claimed to have been sustained and the total sum claimed” (Court of Claims Act § 11 [b] [emphasis supplied]).

“ ‘[B]ecause suits against the State are allowed only by the State’s waiver of sovereign immunity and in derogation of the common law, statutory requirements conditioning suit must be strictly construed’ ” (Lichtenstein v State of New York, 93 NY2d 911, 913 [1999], quoting Dreger v New York State Thruway Auth., 81 NY2d 721, 724 [1992]). Section 11 plainly requires that the claim state the total sum claimant is seeking. Notwithstanding Kolnacki’s argument that “the total sum claimed” does not necessarily have to be a dollar figure, it is clear that her claim — entirely lacking any amount of monetary damages— failed to satisfy the requirements of the statute.

Recently, in Lepkowski v State of New York (1 NY3d 201, 207 [2003]), the claims of civil service employees seeking overtime pay were dismissed for failure to comply with the pleading requirements of section 11 (b). The employees’ claims did not adequately allege when or where they arose, the items of damage claimed or “the total sum claimed” (see Lepkowski, 1 NY3d at 207-208). The Court observed that the State is not responsible for uncovering information that the claimant is required to allege under section 11 (b) (see Lepkowski, 1 NY3d at 208).

Kolnacki argues that Lepkowski is distinguishable because in the present case there is only one deficiency in the claim— failure to allege the total sum claimed — and because this is an action for personal injuries, which may be harder to quantify. These distinctions lack merit. Lepkowski made clear that all of the requirements in section 11 (b) are “substantive conditions upon the State’s waiver of sovereign immunity” (1 NY3d at 207). The failure to satisfy any of the conditions is a jurisdictional defect. And while it may he true that damages in personal injury cases are harder to quantify at the outset, we fail to see why this prevents a claimant from providing any estimate whatsoever. A claim may always be amended at a later time, if necessary.

Moreover, this is not a new principle. We have consistently held that nothing less than strict compliance with the jurisdictional requirements of the Court of Claims Act is necessary (see Long v State of New York, 7 NY3d 269, 276 [2006] [dismissing claimant’s action for failure to comply with verification requirements of Court of Claims Act § 8-b (4)]; Alston v State of New York, 97 NY2d 159, 164 [2001] [dismissing claim for failure to file within the time limitation of Court of Claims Act § 10 (4)]; Lichtenstein, 93 NY2d at 913 [dismissing claim for failure to comply with Court of Claims Act § 10 (2) and (3)]; Dreger, 81 NY2d at 724 [dismissing claims for failure to satisfy the filing and service requirements of Court of Claims Act § 11]). It is clear that the total amount of damages must be specified. Although the result may be harsh, it is for the Legislature, not this Court, to set the terms of the State’s waiver of immunity.

In support of her argument, Kolnacki cites several Appellate Division decisions (see Morris v State of New York, 27 AD3d 282 [1st Dept 2006]; Liberty Mut. Ins. Co. v State of New York, 121 AD2d 694 [2d Dept 1986]; Barski v State of New York, 43 AD2d 767 [3d Dept 1973]). These cases address the situation presented when a claimant seeks to have a notice of intention to file a claim treated as a claim. Given this distinction, they are not pertinent to the issue presented here. The remaining contention is without merit.

Accordingly, the order of the Appellate Division should be reversed, with costs, defendant’s motion to dismiss should be granted, the claim should be dismissed and the certified question should be answered in the negative.

Chief Judge Kaye and Judges Graffeo, Read and Smith concur; Judges Pigott and Jones taking no part.

Order reversed, etc.

       In other statutes, the Legislature has specifically prohibited a claimant from stating a specific amount of damages (see e.g. CPLR 3017 [c] [in a personal injury or wrongful death action, the “complaint shall contain a prayer for general relief but shall not state the amount of damages to which the pleader deems him(or her)self entitled”]; General Municipal Law § 50-e [2] [a notice of claim “against a municipal corporation other than a city with a population of one million or more persons shall not state the amount of damages to which the claimant deems him(or her)self entitled, provided, however, that the municipal corporation . . . may at any time request a supplemental claim setting forth the total damages”]). That the Legislature amended these statutes to prevent a claimant from pleading a particular sum of damages (L 1980, ch 686, § 1, amending General Municipal Law § 50-e [2]; L 1976, ch 955, § 10, amending CPLR 3017) without similarly amending the Court of Claims Act lends support to our conclusion (see generally People v Moquin, 77 NY2d 449, 455-456 [1991]).


author: Graffeo, J.

text:
    [864 NE2d 1272, 832 NYS2d 873]
    Louis E. Thyroff, Appellant, v Nationwide Mutual Insurance Company et al., Respondents.
    Argued February 15, 2007;
    decided March 22, 2007

      POINTS OF COUNSEL

      William P. Tedards, Jr., of the District of Columbia bar, admitted pro hac vice, and Finucane and Hartzell, LLP, Pittsford (Leo G. Finucane of counsel), for appellant.
    Electronic documents are “documents” for purposes of conversion analysis. (Kremen v Cohen, 337 F3d 1024; Pierpoint v Hoyt, 260 NY 26; Agar v Orda, 264 NY 248; Iglesias v United States, 848 F2d 362; Ippolito v Lennon, 150 AD2d 300; Astroworks, Inc. v Astroexhibit, Inc., 257 F Supp 2d 609; Manufacturers Hanover Trust Co. v Chemical Bank, 160 AD2d 113; Shmueli v Corcoran Group, 9 Misc 3d 589.)

      Bingham McCutchen LLP, Hartford, Connecticut (Ben M. Krowicki of counsel), for respondents.
    I. New York common law does not recognize a claim for conversion of an intangible such as electronic data. (Industrial & Gen. Trust, Ltd. v Tod, 170 NY 233; Employers’ Fire Ins. Co. v Cotten, 245 NY 102; Hart v City of Albany, 272 AD2d 668; Agar v Orda, 264 NY 248; Pierpoint v Hoyt, 260 NY 26; Vigilant Ins. Co. of Am. v Housing Auth. of City of El Paso, Tex., 87 NY2d 36; Sporn v MCA Records, 58 NY2d 482; MBF Clearing Corp. v Shine, 212 AD2d 478; Ippolito v Lennon, 150 AD2d 300; Rao v Verde, 222 AD2d 569.) II. New York common law should not be rewritten to encompass intangible electronic data on this appeal. (Madden v Creative Servs., 84 NY2d 738; Hurst v Dezer/Reyes Corp., 82 F3d 232; MetLife Auto & Home v Joe Basil Chevrolet, 1 NY3d 478; Laurent v Williamsburgh Sav. Bank, 28 Misc 2d 140; Nadel v Play-By-Play Toys & Novelties, Inc., 208 F3d 368; Meyer v Guinta, 262 AD2d 463; 1455 Washington Ave. Assoc. v Rose & Kiernan, 260 AD2d 770; Trulock v Freeh, 275 F3d 391; Trombetta v Conkling, 82 NY2d 549; Hartford Acc. & Indem. Co. v Walston & Co., 21 NY2d 219.)
   OPINION OF THE COURT

Graffeo, J.

The United States Court of Appeals for the Second Circuit has certified a question to us that asks whether the common-law cause of action of conversion applies to certain electronic computer records and data. Based on the facts of this case, we hold that plaintiff may maintain a conversion claim.

I

Plaintiff Louis Thyroff was an insurance agent for defendant Nationwide Mutual Insurance Company. In 1988, the parties had entered into an Agent’s Agreement that specified the terms of their business relationship. As part of the arrangement, Nationwide agreed to lease Thyroff computer hardware and software, referred to as the agency office-automation (AOA) system, to facilitate the collection and transfer of customer information to Nationwide. In addition to the entry of business data, Thyroff also used the AOA system for personal e-mails, correspondence and other data storage that pertained to his customers. On a daily basis, Nationwide would automatically upload all of the information from Thyroff’s AOA system, including Thryoffs personal data, to its centralized computers.

The Agent’s Agreement was terminable at will and, in September 2000, Thyroff received a letter from Nationwide informing him that his contract as an exclusive agent had been cancelled. The next day, Nationwide repossessed its AOA system and denied Thyroff further access to the computers and all electronic records and data. Consequently, Thyroff was unable to retrieve his customer information and other personal information that was stored on the computers.

Thyroff initiated an action against Nationwide in the United States District Court for the Western District of New York, asserting several causes of action, including a claim for the conversion of his business and personal information stored on the computer hard drives. In response to Nationwide’s motion to dismiss, District Court held that the complaint failed to state a cause of action for conversion because Thyroff did not allege that Nationwide exercised dominion over the electronic data to his exclusion and it was undisputed that Nationwide owned the AOA system.

In his appeal to the United States Court of Appeals for the Second Circuit, Thyroff sought reinstatement of his conversion cause of action, along with other relief. Nationwide countered that a conversion claim cannot be based on the misappropriation of electronic records and data because New York does not recognize a cause of action for the conversion of intangible property. The Second Circuit determined that the issue was unresolved in New York and therefore certified the following question of law to this Court: is a claim for the conversion of electronic data cognizable under New York law?

II

“The hand of history lies heavy upon the tort of conversion” (Prosser, The Nature of Conversion, 42 Cornell LQ 168, 169 [1957]). The “ancient doctrine” has gone through a great deal of evolution over time (Franks, Analyzing the Urge to Merge: Conversion of Intangible Property and the Merger Doctrine in the Wake of Kremen v. Cohen, 42 Hous L Rev 489, 495 and n 32 [Summer 2005]), dating back to the Norman Conquest of England in 1066 (see Ames, The History of Trover, 11 Harv L Rev 277, 278 [1897] [hereinafter Ames]).

Before the English royal government undertook the prosecution of crime, redress for the tortious or criminal misappropriation of chattels was limited to private actions, such as “the recuperatory appeals of robbery or larceny” available to persons whose property had been stolen (id. at 278). In general, these appeals took two forms. If a thief was immediately apprehended while in possession of the stolen goods, the wrongdoer “was straightaway put to death [by the court], without a hearing, and the [victim] recovered his goods” (id.). In other cases, rightful ownership of the property was usually determined by a “wager of battle” — a physical altercation or duel between the victim and the thief (see Black’s Law Dictionary 1544 [8th ed 2004]), with the victor taking title to the goods (see Ames, 11 Harv L Rev at 279). Because this “remedy” could lead to a thief killing or maiming the chattel’s owner and taking legal ownership of the stolen property, it was “widely detested” by the populace (Black’s Law Dictionary 1544).

Over time, the practice of trial by jury was instituted and wager of battle steadily lost favor (see Ames, 11 Harv L Rev at 279-280). Contributing to its demise at the end of the 12th century was the advent of criminal prosecutions by the Crown. But successful prosecution by the government could result in forfeiture of the stolen chattels to the King rather than the return of property to its rightful owner — an unwelcome prospect for the victim of a theft.

The appeals of robbery and larceny also failed to provide an adequate remedy because a victim could not seek monetary damages from the thief — the only remedy was return of the stolen property. By 1252, a new cause of action — trespass de bonis asportatis — was introduced. It allowed a plaintiff to obtain pecuniary damages for certain misappropriations of property and, following a favorable jury verdict, the sale of the defendant’s property to pay a plaintiff the value of the stolen goods. If, however, the defendant offered to return the property to its rightful owner, the owner had to accept it and “recovery was limited to the damages he had sustained through his loss of possession, or through harm to the chattel, which were usually considerably less than its value” (Prosser, The Nature of Conversion, 42 Cornell LQ at 170).

In the late 15th century, the common law was extended to “fill the gap left by the action of trespass” (Prosser and Keeton, Torts § 15, at 89 [5th ed]) by providing a more comprehensive remedy in cases where a defendant’s interference with property rights was so serious that it went beyond mere trespass to a conversion of the property (see Prosser, 42 Cornell LQ at 169). Known as “trover,” this cause of action was aimed at a person who had found goods and refused to return them to the title owner, and was premised on the theory that:

“the defendant, by ‘converting’ the chattel to his own use, had appropriated the plaintiffs rights, for which he was required to make compensation. The plaintiff was therefore not required to accept the chattel when it was tendered back to him; and he recovered as his damages the full value of the chattel at the time and place of the conversion. . . . The effect was that the defendant was compelled, because of his wrongful appropriation, to buy the chattel at a forced sale, of which the action of trover was the judicial instrument” (id. at 170).

An action for trover originally could not be invoked by a person who did not lose personal property or have a right to immediate possession of the property (see Restatement [Second] of Torts § 222A, Comments a, b; Ames, 11 Harv L Rev at 277). Because of the advantages that trover afforded over older forms of relief, its use was stretched to cover additional misappropriations, including thefts (see Prosser, 42 Cornell LQ at 169; Restatement [Second] of Torts § 222A, Comment a).

Trover gave way slowly to the tort of conversion, which was created to address “some interferences with chattels for which the action of trover would not lie,” such as a claim dealing with a right of future possession (Restatement [Second] of Torts § 222A, Comment b). The technical differences between trover and conversion eventually disappeared. The Restatement (Second) of Torts now defines conversion as an intentional act of “dominion or control over a chattel which so seriously interferes with the right of another to control it that the actor may justly be required to pay the other the full value of the chattel” (id. § 222A [1]).

Ill

As history reveals, the common law has evolved to broaden the remedies available for the misappropriation of personal property. As the concept of summary execution and wager of battle became incompatible with emerging societal values, the law changed. Similarly, the courts became willing to consider new species of personal property eligible for conversion actions.

Conversion and its common-law antecedents were directed against interferences with or misappropriation of “goods” that were tangible, personal property. This was consistent with the original notions associated with the appeals of robbery and larceny, trespass and trover because tangible property could be lost or stolen (see Prosser and Keeton, Torts § 15, at 90). By contrast, real property and all manner of intangible rights could not be “lost or found” in the eyes of the law and were not therefore subject to an action for trover or conversion (see id. at 91).

Under this traditional construct, conversion was viewed as “the ‘unauthorized assumption and exercise of the right of ownership over goods belonging to another to the exclusion of the owner’s rights’ ” (State of New York v Seventh Regiment Fund, 98 NY2d 249, 259 [2002], quoting Vigilant Ins. Co. of Am. v Housing Auth. of City of El Paso, Tex., 87 NY2d 36, 44 [1995]; see e.g. Colavito v New York Organ Donor Network, Inc., 8 NY3d 43, 49-50 [2006]; Industrial & Gen. Trust, Ltd. v Tod, 170 NY 233, 245 [1902]). Thus, the general rule was that “an action for conversion will not normally lie, when it involves intangible property” because there is no physical item that can be misappropriated (Sporn v MCA Records, 58 NY2d 482, 489 [1983]).

Despite this long-standing reluctance to expand conversion beyond the realm of tangible property, some courts determined that there was “no good reason for keeping up a distinction that arose wholly from that original peculiarity of the action” of trover (that an item had to be capable of being lost and found) and substituted a theory of conversion that covered “things represented by valuable papers, such as certificates of stock, promissory notes, and other papers of value” (Ayres v French, 41 Conn 142, 150, 151 [1874]). This, in turn, led to the recognition that an intangible property right can be united with a tangible object for conversion purposes (see Agar v Orda, 264 NY 248, 251 [1934]; Iglesias v United States, 848 F2d 362, 364 [2d Cir 1988]).

In Agar, which involved the conversion of intangible shares of stock, this Court applied the so-called “merger” doctrine because:

“for practical purposes [the shares] are merged in stock certificates which are instrumentalities of trade and commerce. . . . Such certificates ‘are treated by business men as property for all practical purposes.’ . . . Indeed, this court has held that the shares of stock are so completely merged in the certificate that conversion of the certificate may be treated as a conversion of the shares of stock represented by the certificate” (264 NY at 251; see also Pierpoint v Hoyt, 260 NY 26, 28-29 [1932]).

More recently, we concluded that a plaintiff could maintain a cause of action for conversion where the defendant infringed on the plaintiff’s intangible property right to a musical performance by misappropriating a master recording — a tangible item of property capable of being physically taken (see Sporn v MCA Records, 58 NY2d at 489).

IV

We have not previously had occasion to consider whether the common law should permit conversion for intangible property interests that do not strictly satisfy the merger test. Although some courts have adhered to the traditional rules of conversion (see e.g. Allied Inv. Corp. v Jasen, 354 Md 547, 562, 731 A2d 957, 965 [1999] [interests in partnership and corporation]; Northeast Coating Tech., Inc. v Vacuum Metallurgical Co., Ltd., 684 A2d 1322, 1324 [Me 1996] [interest in information contained in prospectus]; Montecalvo v Mandarelli, 682 A2d 918, 929 [RI 1996] [partnership interest]), others have taken a more flexible view of conversion and held that the cause of action can embrace intangible property (see e.g. Kremen v Cohen, 337 F3d 1024, 1033-1034 [9th Cir 2003] [Internet domain name; applying California law]; Shmueli v Corcoran Group, 9 Misc 3d 589, 594 [Sup Ct, NY County 2005] [computerized client/investor list]; see generally Town & Country Props., Inc. v Riggins, 249 Va 387, 396-397, 457 SE2d 356, 363-364 [1995] [person’s name]).

A variety of arguments have been made in support of expanding the scope of conversion. Some courts have decided that a theft of intangible property is a violation of the criminal law and should be civilly remediable (see National Sur. Corp. v Ap plied Sys., Inc., 418 So 2d at 850); that virtual documents can be made tangible “by the mere expedient of a printing key function” (Shmueli v Corcoran Group, 9 Misc 3d at 592); that a writing is a document whether it is read on the computer or printed on paper (see Kremen v Cohen, 325 F3d 1035, 1048 [9th Cir 2003, Kozinski, J., dissenting from certification]); and that the expense of creating intangible, computerized information should be counterbalanced by the protection of an effective civil action (see National Sur. Corp. v Applied Sys., Inc., 418 So 2d at 850).

On the other hand, the primary argument for retaining the traditional boundaries of the tort is that it “seem[s] preferable to fashion other remedies, such as unfair competition, to protect people from having intangible values used and appropriated in unfair ways” (Prosser and Keeton, Torts § 15, at 92). Nonetheless, advocates of this view readily concede that “[t]here is perhaps no very valid and essential reason why there might not be conversion of’ intangible property (id. at 92) and that there is “very little practical importance whether the tort is called conversion, or a similar tort with another name” because “[i]n either case the recovery is for the full value of the intangible right so appropriated” (Restatement [Second] of Torts § 242, Comment e). The lack of a compelling reason to prohibit conversion for redress of a misappropriation of intangible property underscores the need for reevaluating the appropriate application of conversion.

V

“[I]t is the strength of the common law to respond, albeit cautiously and intelligently, to the demands of commonsense justice in an evolving society” (Madden v Creative Servs., 84 NY2d 738, 744 [1995]; see Hymowitz v Eli Lilly & Co., 73 NY2d 487, 507 [1989], cert denied 493 US 944 [1989]). That time has arrived. The reasons for creating the merger doctrine and departing from the strict common-law limitation of conversion inform our analysis. The expansion of conversion to encompass a different class of property, such as shares of stock, was motivated by “society’s growing dependence on intangibles” (Franks, Analyzing the Urge to Merge: Conversion of Intangible Property and the Merger Doctrine in the Wake of Kremen v. Cohen, 42 Hous L Rev at 498). It cannot be seriously disputed that society’s reliance on computers and electronic data is substantial, if not essential. Computers and digital information are ubiquitous and pervade all aspects of business, financial and personal communication activities. Indeed, this opinion was drafted in electronic form, stored in a computer’s memory and disseminated to the Judges of this Court via e-mail. We cannot conceive of any reason in law or logic why this process of virtual creation should be treated any differently from production by pen on paper or quill on parchment. A document stored on a computer hard drive has the same value as a paper document kept in a file cabinet.

The merger rule reflected the concept that intangible property interests could be converted only by exercising dominion over the paper document that represented that interest (see Pierpoint v Hoyt, 260 NY at 29). Now, however, it is customary that stock ownership exclusively exists in electronic format. Because shares of stock can be transferred by mere computer entries, a thief can use a computer to access a person’s financial accounts and transfer the shares to an account controlled by the thief. Similarly, electronic documents and records stored on a computer can also be converted by simply pressing the delete button (cf. Kremen v Cohen, 337 F3d at 1034 [“It would be a curious jurisprudence that turned on the existence of a paper document rather than an electronic one. Torching a company’s file room would then be conversion while hacking into its mainframe and deleting its data would not” (emphasis omitted)]).

Furthermore, it generally is not the physical nature of a document that determines its worth, it is the information memorialized in the document that has intrinsic value. A manuscript of a novel has the same value whether it is saved in a computer’s memory or printed on paper. So too, the information that Thyroff allegedly stored on his leased computers in the form of electronic records of customer contacts and related data has value to him regardless of whether the format in which the information was stored was tangible or intangible. In the absence of a significant difference in the value of the information, the protections of the law should apply equally to both forms— physical and virtual.

In light of these considerations, we believe that the tort of conversion must keep pace with the contemporary realities of widespread computer use. We therefore answer the certified question in the affirmative and hold that the type of data that Nationwide allegedly took possession of — electronic records that were stored on a computer and were indistinguishable from printed documents — is subject to a claim of conversion in New York. Because this is the only type of intangible property at issue in this case, we do not consider whether any of the myriad other forms of virtual information should be protected by the tort.

Accordingly, the certified question should be answered in the affirmative.

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

Following certification of a question by the United States Court of Appeals for the Second Circuit and acceptance of the question by this Court pursuant to section 500.27 of the Rules of Practice of the Court of Appeals (22 NYCRR 500.27), and after hearing argument by counsel for the parties and consideration of the briefs and the record submitted, certified question answered in the affirmative.

      . The District Court dismissed 11 other causes of action set forth in the complaint. The court subsequently granted Nationwide partial summary judgment dismissing a claim of breach of contract to the extent it was premised on the AOA system lease.

      . The Second Circuit also extended an opportunity for us to determine who is the proper owner of the electronic information at issue. Because Thyroff s conversion claim was dismissed pursuant to Federal Rules of Civil Procedure rule 12 (b) (6) and a reviewing court must construe all facts and inferences in Thyroff s favor, we presume that he is the owner of the data for the purpose of resolving the certified question.

      . There were also “punitory appeals,” which, as the name connotes, were utilized solely for punishing thieves in situations where property stolen was of a certain value and could not be recovered (Ames, 11 Harv L Rev at 278).

        . Wager of battle was not formally abolished in England until 1818 (see Black’s Law Dictionary 1544).

      . A Latin phrase meaning “trespass for carrying goods away” (Black’s Law Dictionary 1542).

      . “Detinue,” a related cause of action, provided a similar remedy for the improper detention (as opposed to taking) of property (see Ames, 11 Harv L Rev at 375).

        . The Restatement (Second) of Torts reflects the “merger” theory as follows:
      “(1) Where there is conversion of a document in which intangible rights are merged, the damages include the value of such rights.
      “(2) One who effectively prevents the exercise of intangible rights of the kind customarily merged in a document is subject to a liability similar to that for conversion, even though the document is not itself converted” (Restatement [Second] of Torts § 242).

      . At least one court has approved of the use of conversion by referencing the merger doctrine (see e.g. Astroworks, Inc. v Astroexhibit, Inc., 257 F Supp 2d 609, 618 [SD NY 2003] [conversion of idea that was represented by an Internet Web site]). Conversion claims have also been approved without consideration of the historical limits of the cause of action (see e.g. Cole v Control Data Corp., 947 F2d 313, 318 [8th Cir 1991] [computer software program]; Quincy Cablesystems, Inc. v Sully’s Bar, Inc., 650 F Supp 838, 848 [D Mass 1986] [satellite cable signals]; Charter Hosp. of Mobile, Inc. v Weinberg, 558 So 2d 909, 912 [Ala 1990] [addiction treatment program]; National Sur. Corp. v Applied Sys., Inc., 418-So 2d 847, 850 [Ala 1982] [computer program]; Mundy v Decker, 1999 WL 14479, *4, 1999 Neb App LEXIS 3, *10-12 [Ct App 1999] [WordPerfect documents]).


author: Read, J.

text:
    [864 NE2d 1279, 832 NYS2d 880]
    Nyack Hospital, as Assignee of Allen Zadwdyas, Appellant, et al., Plaintiff, v General Motors Acceptance Corporation et al., Respondents.
    Argued February 8, 2007;
    decided March 22, 2007

      POINTS OF COUNSEL

      Joseph Henig, P.C., Bellmore (<Joseph Henig and Gregory Henig of counsel), for appellant.
    I. Plaintiffs bill exceeded the policy limits, and defendant had no authority to pay subsequent claims that reduced the available proceeds before paying plaintiff. (Presbyterian Hosp. in City of N.Y. v Atlanta Cas. Co., 210 AD2d 210; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742.) II. Defendant had a duty to hold the proceeds for plaintiffs bill in reserve pending receipt of the requested verification. (Maxwell v State Farm Mut. Auto. Ins. Co., 92 AD2d 1049.) III. The No-Fault Law does not authorize the insurer to defer payments under the $50,000 basic economic loss coverage until the insured returns an optional basic economic loss election form.

      Freiberg & Peck, LLP, New York City (Craig J. Freiberg and Yilo J. Kang of counsel), for respondents.
    I. Under the no-fault regulations, defendants-respondents properly handled the disputed claim. (Marsala v Weinraub, 208 AD2d 689; Sega v State of New York, 60 NY2d 183; Didner v Keene Corp., 188 AD2d 15; Schrader v Carney, 180 AD2d 200; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274.) II. Payment of the disputed claim was properly deferred prior to the return of the optional basic economic loss election form by the claimant. (New York & Presbyt. Hosp. v Progressive Cas. Ins. Co., 5 AD3d 568; Presbyterian Hosp. in City of N.Y. v Empire Ins. Co., 220 AD2d 733.)
   OPINION OF THE COURT

Read, J.

We are asked in this no-fault action to decide whether an insurer that is waiting for information to verify a pending claim that causes aggregate claims to exceed $50,000 is prohibited by the priority-of-payment regulation (11 NYCRR 65-3.15) from paying already verified claims in the meantime. For the reasons that follow, we conclude that the priority-of-payment regulation does not preclude these payments.

I.

From July 15, 2003 to August 6, 2003, plaintiff Nyack Hospital (the hospital) treated Allen Zadwdyas (the patient) for multiple significant traumatic injuries that he suffered in an automobile accident. The patient was a covered person under an automobile insurance policy issued by defendants General Motors Acceptance Corporation and GMAC Insurance Company Online, Inc. (collectively, the insurer). The policy included the mandatory no-fault endorsement, providing coverage for basic economic loss up to $50,000 per person/per accident, with additional coverage for optional basic economic loss (OREL) of $25,000 per person.

The hospital, as the patient’s assignee, completed and sent the insurer the proper forms for claiming no-fault benefits for medical services rendered to the patient during his hospital stay. The insurer received these forms on August 20, 2003; the hospital’s claim totaled $74,489.28. Sixteen business days later, on September 12, 2003, the insurer asked the hospital to supply the patient’s complete inpatient hospital records. According to the insurer’s claims adjuster, this “additional verification” was necessary “[i]n order to determine whether the bill should be paid or denied and to properly assess the medical necessity of the services rendered” (see 11 NYCRR 65-3.5 [b] [which provides that “(s)ubsequent to the receipt of one or more of the completed verification forms (here, the NYS Form NF-5 and the UBF-1), any additional verification required by the insurer to establish proof of claim shall be requested within 15 business days of receipt of the prescribed verification forms”]).

While awaiting the hospital’s response, the insurer paid claims for the patient’s lost earnings, and claims from other health service providers. The insurer received the additional verification from the hospital on October 20, 2003. According to the insurer, it had by then made payments on other claims totaling $29,811.12, so that only $20,188.88 of the $50,000 basic economic loss coverage remained.

On November 11, 2003, the insurer sent the patient an OBEL-election form (see 11 NYCRR 65-3.7 [b] [which directs an insurer to mail this form to an OBEL-eligible person within 15 calendar days after the insurer has received claims aggregating $30,000 in basic economic loss]). On November 21, 2003, the insurer notified the hospital that action on its claim was being delayed pending its receipt of this form. The insurer relied on 11 NYCRR 65-3.8 (a) (2), which mandates an insurer to “defer payment of OBEL benefits for claims submitted by or on behalf of the [OBEL-eligible person] until an OBEL option has been elected,” and requires the insurer to “pay or deny such claims under OBEL coverage within 30 calendar days” after an election is made. On November 24, 2003, the insurer received the completed OBEL-election form. The patient chose to have lost earnings paid from the OBEL coverage.,

The insurer asserts that only $19,325.67 of the $50,000 basic economic loss coverage remained as of November 24, 2003 when it received the patient’s completed OBEL-election form. On December 9, 2003, the insurer issued the hospital two checks totaling this amount. On that same date, the insurer also notified the hospital by letter that personal injury protection and medical benefits under the policy had been exhausted by these payments.

The hospital commenced this action in December 2003, alleging that the insurer had not paid or denied its $74,489.28 claim within 30 days as required by Insurance Law § 5106 (a) and 11 NYCRR 65-3.8 (a) (1), and seeking this amount plus statutory interest and attorneys’ fees. After the hospital moved for summary judgment, the insurer cross-moved for summaiy judgment dismissing the complaint, contending that the December 9, 2003 payments were timely, and that it was not required to pay sums in excess of policy limits. In reply, the hospital argued that the insurer violated a no-fault regulation governing priority of payment when it paid health service providers who submitted their claims after August 20, 2003 before paying the hospital’s claim. The regulation relied on by the hospital states that

“[w]hen claims aggregate to more than $50,000, payments for basic economic loss shall be made to the applicant and/or an assignee in the order in which each service was rendered or each expense was incurred, provided claims therefor were made to the insurer prior to the exhaustion of the $50,000. If the insurer pays the $50,000 before receiving claims for services rendered prior in time to those which were paid, the insurer will not be liable to pay such late claims. If the insurer receives claims of a number of providers of services, at the same time, the payments shall be made in the order of rendition of services” (see 11 NYCRR 65-3.15).

On August 16, 2004, Supreme Court denied the hospital’s motion and granted the insurer’s cross motion to dismiss the complaint. On December 27, 2005, the Appellate Division affirmed, holding that “under the circumstances presented, the insurer did not violate 11 NYCRR 65-3.15, as the [hospital’s] initial claim was premature when submitted [on August 20, 2003], and was not complete until the insurer received additional verification of the claim [on October 20, 2003]” (27 AD3d 96, 97 [2d Dept 2005]). In addition, the court determined that the applicable limitation period for the insurer to pay or deny the hospital’s claim did not start to run until November 24, 2003, when the insurer received the patient’s completed OBEL-election form. Accordingly, the Appellate Division concluded that the insurer’s payment of $19,325.67 (the balance of the $50,000 basic economic loss coverage as of November 24, 2003) to the hospital on December 9, 2003 was correct as to the amount due and timely. The insurer was “not required to pay the remaining hospital bill balance of $55,163.61, as the policy limits had been exhausted by the [insurer’s $19,325.67] payment to [the hospital]” (id. at 101). We subsequently granted the hospital permission to appeal.

II.

The hospital argues that once it submitted the requisite forms to make a claim that caused aggregate claims to exceed $50,000, the insurer had a duty under 11 NYCRR 65-3.15, the priority-of-payment regulation, “to keep the money that was due the [hospital] in reserve (up to the policy limits)” of $50,000. In particular, the hospital contends that $35,198.09 in policy proceeds remained unpaid and available on August 20, 2003, and that the insurer should have delayed paying no-fault claims subsequently received from other health service providers, pending the hospital’s response to the insurer’s request for additional verification. Thus, the hospital seeks to recover the moneys “available under the . . . basic economic [loss] policy as of August 20, 2003, less any sums paid to the [hospital] or paid out prior to August 20, 2003.”

The no-fault regulations provide that “[n]o-[f]ault benefits are overdue if not paid within 30 calendar days after the insurer receives proof of claim, which shall include verification of all of the relevant information requested pursuant to section 65-3.5” (11 NYCRR 65-3.8 [a] [1]). With exceptions not relevant to this appeal, an insurer may not deny a claim “prior to its receipt of verification of all of the relevant information requested pursuant to section 65-3.5” (11 NYCRR 65-3.8 [b] [3]). Section 65-3.5 (b), in turn, authorizes the insurer to request “any additional verification required ... to establish proof of claim . . . within 15 business days of receipt of the prescribed verification forms.” This language contemplates that an insurer must pay or deny only a verified claim — that is, a claim that has been verified to the extent compliance with section 65-3.5 dictates in the particular case — within 30 calendar days of receipt; and, conversely, is not obligated to pay any claim until it has been so verified.

To adopt the priority-of-payment regime advocated by the hospital, we would have to interpret “claims” in section 65-3.15 to encompass claims that have not been verified in accordance with section 65-3.5. This approach runs counter to the no-fault regulatory scheme, which is designed to promote prompt payment of legitimate claims. For example, under the hospital’s theory, the insurer in this case could not have paid any verified claims submitted after August 20, 2003 by other health service providers or the patient even though the regulations clearly required the insurer to pay these claims within 30 calendar days after receipt. Further, under the hospital’s theory, once a health service provider submits a bare-bones claim causing policy limits to be exceeded and thereby blocks other payments, it would have significantly less incentive to supply the information necessary to substantiate its claim in a timely fashion.

As we pointed out in Matter of Medical Socy. of State of N.Y. v Serio (100 NY2d 854, 867 [2003]), the Superintendent of Insurance, in adopting revised Regulation 68 (repealing and replacing the prior 11 NYCRR part 65), determined that these regulations were “the most effective means of advancing the legislative intent of providing prompt payment of [no-fault] benefits as the loss is incurred, while reducing rampant abuse.” To read section 65-3.15 in isolation and apart from the rest of the revised no-fault program — which sets tight deadlines for submittal and payment and stresses the justifying of claims — would frustrate this legislative intent.

Next, the insurer requested the additional verification from the hospital 16 business days after receipt of the claim rather than within 15 business days, as required by 11 NYCRR 65-3.5 (b). Section 65-3.8 (j), however, specifies that “[f]or the purposes of counting the 30 calendar days after proof of claim, wherein the claim becomes overdue . . . with the exception of section 65-3.6 of this subpart [65-3], any deviation from the rules set out in this section shall reduce the 30 calendar days allowed.” Accordingly, the insurer was required to pay or deny the hospital’s claim no later than 29 days after October 20, 2003, when the additional verification was received, or by November 18, 2003. This deadline was not extended by the patient’s OBELeligibility: section 65-3.8 (a) (2) of title 11 only directs the insurer to defer payment of no-fault benefits from the $25,000 OBEL coverage until an OBEL option has been elected; it does not command the insurer to defer payment of no-fault benefits from the $50,000 basic economic loss coverage as well.

In sum, the priority-of-payment regulation came into play on October 20, 2003 when the insurer received the requested inpatient hospital records, which established verified claims aggregating more than $50,000. At that point, the insurer should have paid the hospital ahead of any other unpaid verified claims for services rendered or expenses incurred later than the services billed by the hospital, up to the policy’s limits. The insurer was required to pay these moneys to the hospital no later than November 18, 2003.

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

Chief Judge Kaye and Judges Ciparick, Graffeo, Smith and Pigott concur; Judge Jones taking no part.

Order modified, etc.

      . “Basic economic loss” is defined to include up to $50,000 per person for certain health service and other reasonable and necessary expenses as well as lost earnings (see Insurance Law § 5102 [a], [b]). “Basic economic loss” also includes “an additional option to purchase, for an additional premium, an additional [$25,000] of coverage which the insured . . . may specify will be applied to loss of earnings from work and/or psychiatric, physical or occupational therapy and rehabilitation after the initial [$50,000] of basic economic loss has been exhausted” (Insurance Law § 5102 [a] [5]).

      . The hospital sent a completed hospital facility form (NYS Form NF-5) and a uniform billing form (see 11 NYCRR 65-3.5 [g] [which requires an insurer to accept these forms in lieu of the prescribed application for motor vehicle no-fault benefits (NYS Form NF-2) and verification of hospital treatment (NYS Form NF-4)]).

      . Three weekends, including the three-day Labor Day weekend, elapsed between August 20, 2003 and September 12, 2003.

      . The payment log and the claims adjuster’s affidavit, however, seem to indicate that while the insurer had received 17 claims totaling $29,811.12 by October 20, 2003, it had only paid 15 of those claims as of that date. The remaining two claims appear to have been paid in November 2003 for services rendered or expenses incurred after the patient’s stay at the hospital.

      . The OBEL election form asks an OBEL-eligible person to designate OBEL benefits to one of four categories of basic economic loss: (1) basic economic loss including health service expenses, loss of earnings from work, and other reasonable and necessary expenses; or (2) loss of earnings from work, less statutory offsets; or (3) psychiatric, physical or occupational therapy and rehabilitation; or (4) a combination of options (2) and (3) (see 11 NYCRR Appendix 13 [NYS Form NF-13]). We note that the insurer mailed the OBEL election form to the patient 22 calendar days after the date (October 20, 2003) on which the insurer asserts its obligation to do so was triggered, rather than within 15 calendar days as required by 11 NYCRR 65-3.7 (b). The tardiness of this mailing does not affect the outcome of the appeal.

      . Section 65-3.8 (j) refers to time frames specified “in this section” (emphasis added), which would seem to limit its ambit to deadlines in section 65-3.8. If this were the Superintendent’s intent, however, the explicit exception in section 65-3.8 (j) for time frames set forth in section 65-3.6 would be unnecessary. In addition, the example illustrating how section 65-3.8 (j) works is keyed into the five-business-day deadline in section 65-3.4 (b). We note that the provisions corresponding to sections 65-3.8 (j) and 65-3.5 (b) in former part 65 (former 11 NYCRR 65.15 [g] [10] and 65.15 [d] [2] respectively) were included in the same section.


author: Pigott, J.

text:
    [864 NE2d 1284, 832 NYS2d 885]
    In the Matter of John Park, Appellant, v John A. Kapica, as Police Chief of the Town of Greenburgh, et al., Respondents. In the Matter of John Park, Respondent, v John A. Kapica, as Police Chief of the Town of Greenburgh, et al., Appellants.
    Argued February 7, 2007;
    decided March 27, 2007

      POINTS OF COUNSEL

      Thomas J. Troetti, White Plains, for appellant in the first above-entitled proceeding.
    The Appellate Division erred when it held that Sergeant Park’s General Municipal Law § 207-c due process hearing could be delegated to a hearing officer pursuant to the provisions of Civil Service Law § 75 (2), which statute is superseded by the provisions of the special legislation of the Westchester County Police Act, which prohibits such delegation of hearing authority specifically reserved to the local board of police commissioners. (Matter of Rockland County Patrolmen’s Benevolent Assn. v Town of Clarkstown, 149 AD2d 516; Matter of Nieves v Haera, 165 AD2d 201; Matter of Burbridge v Miele, 214 AD2d 669; Matter of Steinmann v Village of Spring Val., 261 AD2d 548; Abate v Mundt, 25 NY2d 309, 403 US 182; Matter of Town of Greenburgh [Police Assn. of Town of Greenburgh], 94 AD2d 771, 60 NY2d 551; Matter of Wiggins v Board of Educ. of City of N.Y., 60 NY2d 385; Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967, 49 NY2d 708; Matter of Curley v Dilworth, 96 AD2d 903; Matter of Shields v Guido, 97 AD2d 849.)

      Law Office of Vincent Toomey, Lake Success (Vincent Toomey and Christine A. Gaeta of counsel), for respondents in the first above-entitled proceeding.
    The court below properly held that in town police departments within Westchester County, General Municipal Law § 207-c hearings are not required to be held before the town board and that such hearings can be conducted by a hearing officer unilaterally appointed by the municipality. (Matter of White v County of Cortland, 97 NY2d 336; Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967, 49 NY2d 708; Matter of Curley v Dilworth, 96 AD2d 903; Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Matter of Fedorczak v Dolce, 202 AD2d 668; Schroeder v City of New York, 371 US 208; Matter of Hurwitz v Perales, 81 NY2d 182; Mathews v Eldridge, 424 US 319; Matter of Rockland County Patrolmen’s Benevolent Assn. v Town of Clarkstown, 149 AD2d 516; Matter of Nieves v Haera, 165 AD2d 201.)

      Donna M.C. Giliberto, Albany, for New York State Conference of Mayors and Municipal Officials, amicus curiae in the first above-entitled proceeding.
    I. The benefit available under General Municipal Law § 207-c is a significant one. (Matter of City of Watertown v State of N.Y. Pub. Empl. Relations Bd., 95 NY2d 73; Matter of Lynch v South Nyack/Grand View Police Dept., 276 AD2d 63; Matter of Burrows [City of Newburgh — Commissioner of Labor], 31 AD3d 1094; Matter of Graham v State Tax Commn., 48 AD2d 444, 40 NY2d 889.) II. A decision which would deprive an individual of a previously granted governmental benefit requires an opportunity to be heard. (Board of Regents of State Colleges v Roth, 408 US 564; Town of Castle Rock v Gonzales, 545 US 748; Matter of Crawford v Sheriff’s Dept., Putnam County, 152 AD2d 382; Matter of Uniform Firefighters of Co-

      hoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Matter of Stewart v County of Albany, 300 AD2d 984; Matter of Heck v Keane, 6 AD3d 95; Matter of Heisler v City of Buffalo, 11 AD3d 998.) III. The statute is silent as to whether a hearing must be provided if benefits are to be terminated, who should make municipal decisions, and who should hear a challenge to a decision. (Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Matter of Crawford v Sheriff’s Dept., Putnam County, 152 AD2d 382; Matter of Stewart v County of Albany, 300 AD2d 984; Matter of House v New York State Off. of Mental Health, 262 AD2d 929; Matter of Prue v Hunt, 78 NY2d 364.) IV. The designation of an individual to hear an appeal of a municipal General Municipal Law § 207-c determination assures an important due process element. (People ex rel. Packwood v Riley, 232 NY 283; Matter of Hughes v Suffolk County Dept. of Civ. Serv., 74 NY2d 833; Matter of Elliot v Goord, 267 AD2d 968; Matter of Di Giacomo v Ames, 72 AD2d 562; Matter of Aiello v Tempera, 65 AD2d 791; Cirasuolo v Hasenauer, 64 AD2d 860; Matter of Waters v McGinnis, 29 AD2d 969.) V. A statute referring to a disciplinary proceeding has no bearing upon a General Municipal Law § 207-c hearing.

      Law Office of Vincent Toomey, Lake Success (Vincent Toomey and Christine A. Gaeta of counsel), for appellants in the second above-entitled proceeding.
    I. A police officer has no property interest in the continued receipt of General Municipal Law § 207-c benefits after he has been determined to be fit for duty. (Matter of Schenectady County Sheriff’s Benevolent Assn. v McEvoy, 124 AD2d 911; Matter of DePoalo v County of Schenectady, 85 NY2d 527; Matter of Poughkeepsie Professional Firefighters’ Assn., Local 596, IAFF, AFL-CIO-CLC v New York State Pub. Empl. Relations Bd., 16 AD3d 797; Board of Regents of State Colleges v Roth, 408 US 564; Cleveland Bd. of Ed. v Loudermill, 470 US 532; Matter of Daxor Corp. v State of N.Y. Dept. of Health, 90 NY2d 89; Matter of Medicon Diagnostic Labs. v Perales, 74 NY2d 539; Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967, 49 NY2d 708; Matter of Schenectady Police Benevolent Assn. v New York State Pub. Empl. Relations Bd., 196 AD2d 171, 85 NY2d 480.) II. The hearing afforded to John Park satisfied due process requirements because it provided him notice and an opportunity to be heard on the issue. (Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967, 49 NY2d 708; Matter of

      Laudico v Netzel, 254 AD2d 811; Matter of De John v Town of Frankfort, 209 AD2d 938; Matter of Curley v Dilworth, 96 AD2d 903; Schroeder v City of New York, 371 US 208; Matter of Hurwitz v Perales, 81 NY2d 182; Cleveland Bd. of Ed. v Loudermill, 470 US 532; Mathews v Eldridge, 424 US 319; Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Board of Regents of State Colleges v Roth, 408 US 564.) III. The recoupment of erroneous overpayments of government funds is a common practice confirmed by many courts and is not prohibited by the Constitution. (Matter of Schwartfigure v Hartnett, 83 NY2d 296; Matter of Leirer v Caputo, 81 NY2d 455; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Matter of Mayflower Nursing Home v Office of Health Sys. Mgt. of Dept. of Health of State of N.Y., 88 AD2d 192, 59 NY2d 935; Matter of Cortlandt Nursing Home v Axelrod, 66 NY2d 169, 476 US 1115; King v Town of Wallkill, 302 F Supp 2d 279; County of Westchester v Sheehan, 292 AD2d 486; Matter of County of Westchester v Westchester County Correction Officers Benevolent Assn., 278 AD2d 414, 96 NY2d 708; Matter of Farber v City of Utica, 1 AD3d 942; Califano v Yamasaki, 442 US 682.) IV. The clear and unambiguous language of General Municipal Law § 207-c provides that the statutory benefits will end when the disability ceases and/or the officer refuses light duty, and does not prohibit recoupment by the municipality. (Matter of Grand Jury Subpoena Duces Tecum Served on Museum of Modern Art, 93 NY2d 729; People v McFadden, 205 AD2d 560; People v Floyd J., 61 NY2d 895; Matter of Schenectady Police Benevolent Assn. v New York State Pub. Empl. Relations Bd., 196 AD2d 171, 85 NY2d 480; Goglia v Sardino, 119 Misc 2d 907, 101 AD2d 1013, 64 NY2d 1084; Matter of DePoalo v County of Schenectady, 85 NY2d 527; Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; King v City of Newburgh, 84 AD2d 388; Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967, 49 NY2d 708; Matter of Curley v Dilworth, 96 AD2d 903.)

      Thomas J. Troetti, White Plains, for respondent in the second above-entitled proceeding.
    I. There is nothing in the language of General Municipal Law § 207-c which authorized respondents to retroactively divest Sergeant Park of the statutorily mandated benefits he had received. (Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967; Goglia v Sardino, 119 Misc 2d 907, 101 AD2d 1013, 64 NY2d 1084; Matter of Prue v Hunt, 78 NY2d 364; Matter of Uniform Firefighters of Cohoes, Local

      2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Cleveland Bd. of Ed. v Loudermill, 470 US 532; Matter of Crawford v Sheriff’s Dept., Putnam County, 152 AD2d 382, 76 NY2d 704; Matter of Laudico v Netzel, 254 AD2d 811; Matter of Dacey v County of Dutchess, 121 AD2d 536; Matter of DePoalo v County of Schenectady, 85 NY2d 527; Matter of Schenectady Police Benevolent Assn. v New York State Pub. Empl. Relations Bd., 196 AD2d 171.) II. Because there was no right to retroactively divest a police officer of General Municipal Law § 207-c benefits, the salary received by Sergeant Park was not an erroneous payment of public funds which respondents were entitled to recoup. (County of Westchester v Sheehan, 292 AD2d 486; Matter of Farber v City of Utica, 1 AD3d 942; Califano v Yamasaki, 442 US 682; Matter of Schwartfigure v Hartnett, 83 NY2d 296; Matter of Daleview Nursing Home v Axelrod, 62 NY2d 30; Matter of Leirer v Caputo, 81 NY2d 455; King v Town of Wallkill, 302 F Supp 2d 279.) III. Respondents’ appeal should be dismissed because this Court is without jurisdiction to entertain respondents’ claimed right to appeal, on constitutional grounds, pursuant to CPLR 5601 (b) (1). (Matter of Shannon B., 70 NY2d 458; Matter of Barbara C., 64 NY2d 866; Lichtman v Grossbard, 73 NY2d 792; Melahn v Hearn, 60 NY2d 944; Matter of Eagle v Paterson, 57 NY2d 831; Barber v Dembrowski, 54 NY2d 648; Matter of Schulz v State of New York, 81 NY2d 336; Matter of Skenesborough Stone v Village of Whitehall, 95 NY2d 902; Bingham v New York City Tr. Auth., 99 NY2d 355; Matter of Mingo v Pirnie, 55 NY2d 1019.)

      Donna M.C. Giliberto, Albany, for New York State Conference of Mayors and Municipal Officials, amicus curiae in the second above-entitled proceeding.
    I. The benefit available under General Municipal Law § 207-c is a significant one. (Matter of City of Watertown v State of N.Y. Pub. Empl. Relations Bd., 95 NY2d 73; Matter of Lynch v South Nyack/Grand View Police Dept., 276 AD2d 63; Matter of Burrows [City of Newburgh — Commissioner of Labor], 31 AD3d 1094; Matter of Graham v State Tax Commn., 48 AD2d 444, 40 NY2d 889.) II. A recipient of General Municipal Law § 207-c benefits who challenges a municipal decision under the statute must be afforded an opportunity to be heard. (Board of Regents of State Colleges v Roth, 408 US 564; Town of Castle Rock v Gonzales, 545 US 748; Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686.) III. While a municipality should be allowed to terminate General Municipal Law § 207-c payments when an administrative decision is reached, the issue in this litigation should be resolved on the principle of equity. (Matter of Jefferson v Bronx Psychiatric Ctr., 55 NY2d 69; Matter of Milan v Trico Prods. Corp., 53 NY2d 867; Matter of Lynch v Board of Educ. of City of N.Y., 3 NY2d 871; Matter of Gamma v Ferrara, 274 AD2d 479.)

      Tuttle Law Firm, Latham {James B. Tuttle of counsel), for Police Conference of New York, Inc., amicus curiae in the first and second above-entitled proceedings.
    I. A retroactive right of recoupment of General Municipal Law § 207-c benefits paid would violate the established principle that section 207-c benefits constitute a property interest giving rise to procedural due process protections under the Fourteenth Amendment to the United States Constitution before they can be terminated. (Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686; Matter of DePoalo v County of Schenectady, 85 NY2d 527; Cleveland Bd. of Ed. v Loudermill, 470 US 532; Matter of Prue v Hunt, 78 NY2d 364; Goglia v Sardino, 119 Misc 2d 907; Mathews v Eldridge, 424 US 319; Gilbert v Homar, 520 US 924; Matter of Schenectady Police Benevolent Assn. v New York State Pub. Empl. Relations. Bd., 85 NY2d 480; Matter of Crawford v Sheriff’s Dept., Putnam County, 152 AD2d 382, 76 NY2d 704.) II. The court below incorrectly concluded that the due process hearing provided to Sergeant Park which was carried out in accordance with the procedures of section 75 of the Civil Service Law was sufficient. (Matter of Hodella v Chief of Police of Town of Greenburgh, 73 AD2d 967, 49 NY2d 708; Matter of Curley v Dilworth, 96 AD2d 903; Matter of Shields v Guido, 97 AD2d 849; Matter of Hamilton v City of Schenectady, 210 AD2d 843; Matter of Meehan v County of Tompkins, 219 AD2d 774.)
   OPINION OF THE COURT

Pigott, J.

Petitioner, John Park, a police officer employed by the Town of Greenburgh, underwent surgery in June 2002 as the result of an injury he sustained while in the line of duty. He was certified disabled from his duties pursuant to General Municipal Law § 207-c (1), which states that a police officer injured in the line of duty must be paid by his municipal employer “the full amount of his regular salary or wages until his disability arising therefrom has ceased.”

In March 2003, the Town’s medical examiner concluded that Park could return to work in a sedentary capacity. Park’s supervisor, Greenburgh Chief of Police John A. Kapica, directed him to return to light duty starting April 21, 2003. Park objected to the medical examiner’s determination, submitted a report from his treating physician indicating that he had a “permanent total disability” and requested a hearing on the issue of his ability to return to work. The Town Board appointed a hearing officer and a hearing was scheduled to determine the extent of Park’s disability. However, before the hearing could be held, Park commenced a CPLR article 78 proceeding (Proceeding No. 1) objecting to the Town’s appointment of a hearing officer and seeking a stay of the hearing on the ground that, pursuant to section 7 of the Westchester County Police Act (WCPA) (L 1936, ch 104, as amended by L 1941, ch 812, § 1), any hearing had to be conducted before the Town Board.

Supreme Court denied Park’s application to stay the hearing; nevertheless, Park refused to participate in the hearing, which proceeded on the date scheduled with Park in absentia. The Hearing Officer concluded that Park was fit to return to light duty, that his refusal to do so was without justification, and that the Town could recoup any section 207-c benefits paid to Park from April 21, 2003 until such time as he returned to work. Kapica directed Park to begin his light-duty assignment on August 4, 2003, but rather than return to work, Park retired on August 26, 2003.

On October 20, 2003, Supreme Court dismissed the petition, holding that the Town’s appointment of the Hearing Officer was proper. The Appellate Division affirmed, adding that “[t]he procedures for terminating disability payments under General Municipal Law § 207-c must be read in conjunction with Civil Service Law § 75” (25 AD3d 801, 801 [2006]).

Following the dismissal of the petition in Proceeding No. 1, Park commenced a second article 78 proceeding (Proceeding No. 2) seeking, among other things, the annulment of the Hearing Officer’s determination that the Town could recoup section 207-c benefits paid to him. Supreme Court granted the petition, ruling that the Town had no authority to recoup payments made to Park prior to the Hearing Officer’s finding that he was fit for light duty. The Appellate Division again affirmed, holding that the Town could not recoup section 207-c benefits paid to Park “before August 4, 2003, the date after the conclusion of the due process hearing when [Park] had been directed to return to work” (25 AD3d 802, 803 [2006]).

We now affirm the order of the Appellate Division in Proceeding No. 1, albeit on a different ground, and also affirm the order of the Appellate Division in Proceeding No. 2.

Pursuant to General Municipal Law § 207-c, municipalities meeting certain population criteria are directed to pay continued salary or wages to officers who sustain a disability in the course of their employment. The continued receipt of section 207-c disability payments is not absolute, however. A municipality is entitled to its own medical examination of its employee (see General Municipal Law § 207-c [1]); and if, in that physician’s opinion the officer can perform “specified types of light police duty,” payment of the full amount of salary or wages may be discontinued should the officer refuse to return to work if a light-duty assignment “is available and offered to him” (General Municipal Law § 207-c [3]).

The right of a disabled officer to receive section 207-c disability payments constitutes “a property interest giving rise to procedural due process protection, under the Fourteenth Amendment, before those payments are terminated,” and a due process hearing is triggered when an officer on section 207-c status submits evidence from his treating physician supporting the officer’s claim of “continued total disability” (Matter of Uniform Firefighters of Cohoes, Local 2562, IAFF, AFL-CIO v City of Cohoes, 94 NY2d 686, 691, 692 [2000] [pursuant to the analogous provision General Municipal Law § 207-a, firefighters who contest a light-duty determination are entitled to a due process hearing]).

Proceeding No. 1

At issue on the appeal in Proceeding No. 1 is Park’s claim that the Town improperly followed Civil Service Law § 75 by delegating Park’s section 207-c hearing to a hearing officer instead of following section 7 of the WCPA. Civil Service Law § 75 and section 7 of the WCPA, however, apply to disciplinary actions. Because Park was not subject to discipline or to the threat of termination for contesting the medical examiner’s light-duty determination, neither of those sections applies. Therefore, the Appellate Division erred in stating that Civil Service Law § 75 should be “read in conjunction with” General Municipal Law § 207-c, a holding that implies that all due process hearings pursuant to section 207-c must comply with Civil Service Law § 75. Such is not the case. We are concerned here solely with whether Park was afforded due process in contesting the medical examiner’s determination, which bears no relation to a disciplinary proceeding. Nonetheless, we affirm the order of the Appellate Division because the procedure employed by the Town concerning Park’s challenge to the medical examiner’s light-duty determination comported with procedural due process.

We have previously stated that section 207-c provides no definitive procedure that must be followed, and that such procedures may be the subject of collective bargaining (see Matter of City of Watertown v State of N.Y. Pub. Empl. Relations Bd., 95 NY2d 73, 80-81 [2000]). The parties here have not collectively bargained a procedure to be followed when an officer contests a light-duty determination. Therefore, the Town was free to fashion a hearing remedy so long as its procedure afforded Park due process.

Here, Park’s interest in the continued receipt of disability benefits was adequately protected by the Town’s due process procedure. Although he chose not to participate in the hearing, he was nevertheless given the opportunity to contest the medical examiner’s light-duty determination by presenting his own witnesses and cross-examining the Town’s witnesses. Moreover, the Town did not terminate his disability benefits at any time prior to his hearing. Therefore, while we affirm the Appellate Division’s order in Proceeding No. 1, we do so on the ground that the procedure followed by the Town sufficiently met the dictates of due process.

Proceeding No. 2

The appeal in Proceeding No. 2 brings up for review the issue whether the Town is entitled to recoup section 207-c payments made to Park between April 21, 2003, the date he was initially directed to begin his light-duty assignment, and August 4, 2003, the date he was directed to begin his light-duty assignment after the Hearing Officer affirmed the medical examiner’s findings. We hold that it is not.

There is no provision in section 207-c allowing the recoupment of disability payments made to an officer who is later found to be able to work (see e.g., Matter of DePoalo v County of Schenectady, 85 NY2d 527, 532 [1995]; see also Matter of Uniform Firefighters of Cohoes, 94 NY2d at 693). A municipality may discontinue disability payments once its medical examiner finds that the officer can perform a light-duty assignment and the officer “refuse[s] to perform” that duty (General Municipal Law § 207-c [3]). Should an officer refuse to return to work and fail to provide medical proof that he is unable to do so, the medical examiner’s opinion is dispositive and disability payments may be discontinued without a hearing (id.). However, a municipality is not permitted to recoup section 207-c payments where, as here, the officer avails himself of due process protections by challenging the medical examiner’s determination because such a challenge cannot be equated with a refusal to return to duty. We rest our conclusion solely on our reading of the applicable statutes, and do not suggest that there would be any constitutional bar to a recoupment of benefits in a situation like this one, had the Legislature so provided.

Accordingly, the orders of the Appellate Division in Proceeding Nos. 1 and 2 should be affirmed, with costs.

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

In each case: Order affirmed, with costs.

      . Section 7 of the WCPA, entitled “Discipline and charges,” states that no member of a police department “shall be fined, reprimanded, removed or dismissed” until the charges have been investigated, and further provides that the trial of those charges “shall not be delegated and must be heard before the full town board or full board of police commissioners.”

      . Civil Service Law § 75, entitled “Removal and other disciplinary action,” delineates certain due process procedures for “person[s] against whom removal or other disciplinary action is proposed” and, in particular, allows the delegation of evidentiary hearings to “a deputy or other person designated” (Civil Service Law § 75 [2]).