Jul 20, 2017

Court of Appeals #13

Court of Appeals

The 2016/2017 Term of the Court of Appeals ended “not with a bang but a whimper” — that is to say, without any “blockbuster” rulings.

The decisions of the last several months ran the gamut of civil litigation claims — from promissory estoppel; the damage element of a fraudulent inducement claim; New York jurisdiction to resolve a dispute over an oral agreement made in Spain; whether or not a claim under a liability policy covered “an additional insured”; to the validity of DMV regulations with respect to the restoration of privileges to recidivist drunk drivers.  In criminal proceedings, the Court addressed evidentiary issues relating to the police loss of a video recording of a crime and the use of visual demonstrations and annotated trial exhibits during summations by prosecutors.

Matter of Hennel, 2017 NY Slip Op 05266 (June 29, 2017)

May promissory estoppel be used to prevent reliance on the statute of frauds?  Answer:  Yes, but only if the party who detrimentally relied on the oral promise would otherwise suffer unconscionable injury.

This matter originated in the Surrogate’s Court as the petitioners’ claim against their grandfather’s estate based on promissory estoppel and unconscionability.  The decedent owned a four-unit apartment building in Schenectady. The property was subject to a mortgage from a $100,000 loan which had been used to make cash gifts to six of decedent’s family members, including the two petitioners.  They were all shareholders in the family owned golf course business and loaned their cash gifts to the business. After several disagreements, that company redeemed the shares of the four shareholders, other than petitioners, and repaid those four shareholders for their loans leaving petitioners as the sole shareholders of the business by May 2006.

Prior to 2006, Petitioners had assisted decedent with maintenance of the grounds and snow removal at the apartment building. In the summer of 2006, decedent approached petitioners about taking ownership of the building and assuming all management and maintenance duties.  Petitioners explained to decedent that they did not wish to take ownership of the property subject to the mortgage because they believed they would be subsidizing the gifts to the four other former shareholders.  Decedent orally promised that he would direct that the balance of the mortgage be paid upon his death from the assets of his estate.

On September 22, 2006, in the office of a family attorney, decedent executed a warranty deed granting ownership of the building to petitioners. Decedent reserved to himself a life estate in the property. The deed further reserved to decedent the power to appoint the remainder interest to any of his issue other than petitioners during his lifetime. Decedent never exercised that power.  Decedent also executed a will that provided that the mortgage on the property, if any in existence at the time of his death, be paid from the assets of his estate.

Petitioners then assumed all management and maintenance duties for the property. Petitioners asserted that these activities occupied a significant amount of their time. Petitioners were able to make the mortgage payments entirely with the building’s rental income.

In 2008, decedent executed a new will which revoked all prior wills and made no mention of satisfaction of the building’s mortgage. Petitioners asserted that decedent informed them that he had executed a new will but assured them that there had been “no change” in their agreement with respect to the property.  Therefore, petitioners continued to manage and maintain the property.

Decedent died on December 1, 2010. His widow, respondent Hazel Hennel, as the executor of his estate under the 2008 will, sought probate. After respondent rejected petitioners’ claim, they commenced the present proceeding, pursuant to SCPA 1809, to determine the validity of their claim. It included four causes of action: breach of contract, breach of title warranty, promissory estoppel, and unjust enrichment. Respondent objected, asserting, inter alia, that petitioners’ claim was barred by the statute of frauds.

The family attorney’s deposition testimony confirmed the details of the meeting at his office on September 22, 2006, including decedent’s execution of the 2006 will. The attorney testified that the relevant provision in the 2006 will was designed to ensure that petitioners would own the building free of any mortgage upon decedent’s death.

Petitioners moved for summary judgment.  In her cross motion for summary judgment, respondent did not dispute petitioners’ factual allegations.  She submitted an appraisal report assessing market value for the building at the time of decedent’s death at $235,000. The unpaid principal and interest on the mortgage was $88,394.91, which had been reduced to $82,194.57 by the time of the motions.

Surrogate’s Court held that petitioners’ claim fell “squarely within that limited class of cases where promissory estoppel should be applied to remedy a potential injustice.”  Summary judgment was granted to petitioners and respondent was directed to satisfy the outstanding balance of the mortgage and reimburse petitioners for the post-death payments.

The Appellate Division divided three to two.  The majority agreed with respondent that “decedent never gave up his right to revoke the provision of the 2006 will regarding the satisfaction of the mortgage in writing, and that his oral commitment to do so [ran] afoul of the statute of frauds.”  The court concluded that petitioners had satisfied their obligation to “bring this case within an exception to the statute of frauds” by establishing the elements of promissory estoppel and that application of the statute of frauds would be unconscionable under the circumstances.  The dissent would have held that application of the statute of frauds would not inflict an unconscionable injury upon petitioners, and therefore petitioners could not rely on promissory estoppel to enforce their oral bargain with decedent.

It was conceded that the statute of frauds would generally bar reliance on petitioners’ oral bargain with decedent.  Thus, as the Appellate Division held, “Petitioners were obliged to bring this case within an exception to the statute of frauds.”  Petitioners attempted to do so through the doctrine of promissory estoppel.  Respondent agreed that the statute of frauds will not apply if petitioners could establish the elements of promissory estoppel and that they would otherwise suffer unconscionable injury.  The Court of Appeals, which had not expressly recognized this principle before, adopted it for several reasons.  It held:

Where the elements of promissory estoppel are established, and the injury to the party who acted in reliance on the oral promise is so great that enforcement of the statute of frauds would be unconscionable, the promisor should be estopped from reliance on the statute of frauds.

Admonishing as to unconscionability that:

In the similar context of unconscionable contracts, we have stated that an unconscionable agreement is “one such as no person in his or her senses and not under delusion would make on the one hand, and as no honest and fair person would accept on the other, the inequality being so strong and manifest as to shock the conscience and confound the judgment of any person of common sense”[.]

The standard for unconscionability where one party is seeking to avoid the statute of frauds must be equally demanding, lest the statute of frauds be rendered a nullity[.]

The Court concluded that petitioners had failed to demonstrate an unconscionable injury sufficient to estop respondent’s reliance on the statute of frauds.  It explained that petitioners were able to make the mortgage payments entirely from the rental income generated by the building, they had not expended any personal funds, and that the building had $150,000 of equity.  The Court noted that:

Here, viewing the facts in the light most favorable to petitioners, application of the statute of frauds does not render a result so inequitable and egregious “as to shock the conscience and confound the judgment of any person of common sense.”  Respondent demonstrated that petitioners would not suffer unconscionable injury if the statute of frauds were applied, and petitioners failed to raise a disputed issue of material fact in opposition.

Accordingly, the Court reversed the Order of the Appellate Division and granted respondent summary judgment dismissing petitioners’ claim.  In an interesting twist, Judge Wilson filed a dissent which begins: “I am in the odd position of endorsing everything in the majority’s opinion except the result.”  Judge Wilson believed that the matter should have been remitted to the Appellate Division for determination of another issue not raised in the Court of Appeals and not decided by the Appellate Division – whether the obligation to pay the mortgage was covered by the provision of the 2008 will directing payment of all “just debt”. The majority explained that the undecided issue was reliant on the decedent’s promise to have his estate pay the mortgage and that neither party had raised any argument before it concerning the other issue.

Connaughton v. Chipotle Mexican Grill, Inc., 2017 NY Slip Op 03445 (May 2, 2017)

Must a plaintiff plead compensable damages to avoid dismissal of a fraudulent inducement claim?  Answer:  Yes.

The Court of Appeals addressed an Order of the Appellate Division affirming the dismissal of a complaint, asserting fraudulent inducement of a business development agreement, for failure to state a cause of action.

The Court of Appeals summarized the facts:

Plaintiff is a well-known chef who, prior to his employment with Chipotle, was developing a concept for a ramen restaurant chain. Plaintiff prepared a business plan and actively pursued potential buyers until Ells [Chipotle’s CEO] showed interest in the concept. Plaintiff then turned his efforts to developing ideas specifically for Chipotle’s restaurant platform. Thereafter, Ells offered to purchase the concept, and plaintiff, with the assistance of legal counsel, negotiated an agreement whereby he would work on the restaurant design for Chipotle with the title of Culinary Director based out of New York City.

The agreement expressly states that plaintiff’s employment was at-will, and that both plaintiff and Chipotle had the right to terminate the contract at any time without notice or cause…

Everything went well for the first two years of plaintiff’s employment and it appeared that defendants were on a schedule to open the new restaurant.  The Court explained:

While plaintiff was working on staffing for the new restaurant, he learned from Chipotle’s Chief Marketing Officer (CMO) that Ells had a non-disclosure agreement (NDA) with another well-known chef, who previously worked with defendants on a ramen restaurant concept, similar in both purpose and design to the one defendants contracted plaintiff to develop. The prior project fell apart when that chef and defendants failed to agree on financial terms. Defendants remained subject to the NDA with the other chef. Chipotle’s CMO confided in plaintiff that the chef would sue under the NDA if Chipotle opened the ramen restaurant. Plaintiff further alleged that defendants converted, without authorization, the other chef’s design for what became the Washington, D.C. flagship restaurant for one of Chipotle’s other brands.

When plaintiff confronted Ells about the NDA, Ells told him to continue with the work on the ramen restaurant, but plaintiff refused. Soon thereafter, Ells fired plaintiff.

In his suit for fraudulent inducement:

Plaintiff claimed that by virtue of his reasonable reliance on Ells’ omissions about the business arrangement with the other chef, defendants fraudulently induced him to work for Chipotle and to share his restaurant concept to his detriment. He alleged that he would not have entered into the agreement with defendants had he known about the prior business arrangement…Plaintiff claimed he was “damaged in an amount to be determined at trial, including, but not limited to, the value of his Chipotle equity and lost business opportunities in connection with his ramen concept.” He further requested compensatory and punitive damages in amounts to be determined at trial, as well as attorneys’ fees and disbursements.  Defendants moved to dismiss the complaint, inter alia, under CPLR 3211(a)(7), for failure to state a cause of action. Defendants argued that a cause of action for fraudulent inducement may be maintained only where a party has suffered out-of-pocket pecuniary loss, not where damages are speculative or consist of lost business opportunities.

Supreme Court granted the motion and the Appellate Division affirmed with two justices dissenting.

The Court summarized the applicable law:

To allege a cause of action based on fraud, plaintiff must assert “a representation or a material omission of fact which was false and known to be false by defendant, made for the purpose of inducing the other party to rely upon it, justifiable reliance of the other party on the misrepresentation or material omission and injury”…Critically, “[a] false representation does not, without more, give rise to a right of action, either at law or in equity, in favor of the person to whom it is addressed. To give rise, under any circumstances, to a cause of action, either in law or equity, reliance on the false representation must result in injury. . . . If the fraud causes no loss, then the plaintiff has suffered no damages”[.]

The measure of damages:

In New York, as in multiple other states, “`[t]he true measure of damage is indemnity for the actual pecuniary loss sustained as the direct result of the wrong’ or what is known as the `out-of-pocket’ rule”…Under that rule, “[d]amages are to be calculated to compensate plaintiffs for what they lost because of the fraud, not to compensate them for what they might have gained.…[T]here can be no recovery of profits which would have been realized in the absence of fraud”…Moreover, this Court has “consistent[ly] refus[ed] to allow damages for fraud based on the loss of a contractual bargain, the extent, and indeed . . . the very existence of which is completely undeterminable and speculative”[.]

Concluding that:

Here, plaintiff’s pleading is fatally deficient because he did not assert compensable damages resulting from defendants’ alleged fraud. The complaint alleges that in reliance on defendants’ fraudulent omissions, plaintiff stopped soliciting potential buyers. However, the complaint fails to allege that, in doing so, he rejected another prospective buyer’s offer to purchase the concept. Instead, plaintiff avers that once Ells showed an interest in his ramen restaurant idea, plaintiff turned to selling the concept to Chipotle. These are factual assertions of the quintessential lost opportunity, which are not a recoverable out-of-pocket loss…As this Court has repeatedly stated, such damage is “disallowed as too speculative a recovery”[.]

Similarly inadequate to satisfy his pleading burden are plaintiff’s allegations that he might incur litigation expenses and potential loss of reputation if named in a civil action by the other chef. These are not claims of actual out-of-pocket loss but speculative claims of possible future damages, and fare no better than his lost profits claim. There are also no facts alleged in the complaint to support allegations of reputational harm. For example, plaintiff did not assert or provide facts from which it could be inferred that he lost standing within the restaurant industry, or that he is unemployable as a result of his association with Chipotle.

*     *     *

Here, “accept[ing] the facts as alleged in the complaint as true, and accord[ing] plaintiff[] the benefit of every possible favorable inference,” plaintiff failed to plead a cause of action for fraudulent inducement…Plaintiff did not allege any out-of-pocket loss, and he did not otherwise plead a recoverable harm. We may not read into his allegations a claim for cognizable damages, which he did not actually incur, under the guise of liberally construing the complaint[.]

D&R Global Selections, S.L. v. Bodega Olegario Falcon Pineiro, 2017 NY Slip Op 04494 (June 8, 2017)

Does the Supreme Court have personal jurisdiction over a Spanish winery that entered into an oral agreement in Spain?  Answer:  Yes, where the winery purposefully availed itself of New York by a representative visiting the state multiple times and entering into a distribution agreement with a New York company and an oral argument that was related to the New York activity.

The Appellate Division granted defendant’s motion to dismiss for lack of personal and subject matter jurisdiction.  The Court of Appeals was called upon to address whether jurisdiction arose from defendant’s transaction of business in New York.

The Court of Appeals summarized the facts:

Defendant Bodega Olegario Falcon Pineiro is a winery located in Pontevedra, Spain. In March 2005, defendant entered into an oral agreement there with plaintiff D & R Global Selections, S.L., a Spanish limited liability company also based in Pontevedra. Neither plaintiff nor defendant has offices or a permanent presence in New York. Pursuant to their oral agreement, plaintiff agreed to locate a distributor to import defendant’s wine into the United States; in return, defendant agreed to pay commissions to plaintiff at a specified rate on wine sales made to that distributor.

Following the agreement, defendant accompanied plaintiff to New York several times to meet potential distributors and promote defendant’s wine. In May 2005, defendant attended the Great Match Event in New York, which showcased wines from Spanish vineyards. At that event, plaintiff introduced defendant to Kobrand Corp. …a wine importer and distributor located in New York. Defendant began selling wine to Kobrand in November 2005. In January 2006, defendant accompanied plaintiff to two events in New York that promoted Kobrand’s Spanish wine portfolio, including defendant’s wine. Defendant subsequently entered into an exclusive distribution agreement with Kobrand. Through November 2006, defendant paid commissions to plaintiff in Spain on wine defendant sold to Kobrand. In or around January 2007, defendant stopped paying commissions to plaintiff even as defendant continued to sell wine to Kobrand. Defendant contends that its obligation to pay commissions under the oral agreement expired after one year.

Plaintiff sued in Supreme Court for unpaid commissions alleging breach of contract, quantum meruit, unjust enrichment and for an accounting. Plaintiff alleged that defendant’s obligation to pay commissions continued as long as defendant sold wine to Kobrand.   Initially, a default judgment was obtained but after Supreme Court denied Defendant’s motion to vacate and to dismiss, the Appellate Division reversed.  The Appellate Division held that the personal jurisdiction issue involved a question of fact.

On remand, defendant moved for summary judgment based on lack of personal and subject matter jurisdiction. Supreme Court denied the motion, citing the Appellate Division order. Defendant again appealed and the Appellate Division reversed. This time the Appellate Division held that defendant was not subject to personal jurisdiction under CPLR 302 (a) (1). The Appellate Division held that “defendant’s visits to New York to promote its wine constitute the transaction of business here,” but concluded that “there is no substantial nexus between plaintiff’s claim for unpaid commissions in connection with the sales of that wine, pursuant to an agreement made and performed wholly in Spain, and those promotional activities”[.]

CPLR 302 (a) (1) provides, in pertinent part:

As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent . . . transacts any business within the state or contracts anywhere to supply goods or services in the state.

The Court of Appeals discussed the two bases for long-arm jurisdiction under CPLR 302(a)(i):

This rule provides two distinct grounds for long-arm jurisdiction: where a defendant “transacts business” in the state and where a defendant “contracts anywhere to supply goods or services” in the state. Under either ground, we conduct a twofold jurisdictional inquiry…First, the defendant must have purposefully availed itself of “the privilege of conducting activities within the forum State” by either transacting business in New York or contracting to supply goods or services in New York…Second, the claim must arise from that business transaction or from the contract to supply goods or services[.]

And concluded that the test for jurisdiction under the first ground was satisfied here:

CPLR 302 (a) (1) requires us to first determine if defendant purposefully availed itself “of the privilege of conducting activities” in the State by transacting business in New York. A non-domiciliary defendant transacts business in New York when “on his or her own initiative[,] the non-domiciliary projects himself or herself into this state to engage in a sustained and substantial transaction of business”…As relevant here, purposeful availment occurs when the non-domiciliary “seeks out and initiates contact with New York, solicits business in New York, and establishes a continuing relationship”[.]

The Appellate Division properly determined that defendant transacted business in New York. The oral agreement between the parties required plaintiff to locate a United States distributor to import defendant’s wine. In furtherance of their agreement, defendant accompanied plaintiff to New York several times between May 2005 and January 2006 to attend wine industry events. Plaintiff introduced defendant to Kobrand, a New York-based distributor, at the Great Match Event in New York, and defendant returned to New York at least twice to promote its wine alongside plaintiff and Kobrand. Defendant eventually entered into an exclusive distribution agreement with Kobrand for the importation of its wine into the United States.

Thus, not only was defendant physically present in New York on several occasions, but its activities here resulted in “`the purposeful creation of a continuing relationship with a New York corporation’”…Defendant’s contacts with New York establish that defendant purposefully availed itself of “the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws”[.]

Followed by the “substantial relationship” analysis:

It is not enough that a non-domiciliary defendant transact business in New York to confer long-arm jurisdiction. In addition, the plaintiff’s cause of action must have an “articulable nexus” or “substantial relationship” with the defendant’s transaction of business here…At the very least, there must be “a relatedness between the transaction and the legal claim such that the latter is not completely unmoored from the former, regardless of the ultimate merits of the claim”…This inquiry is “relatively permissive” and an articulable nexus or substantial relationship exists “where at least one element arises from the New York contacts” rather than “every element of [the] cause of action pleaded”…The nexus is insufficient where the relationship between the claim and transaction is “too attenuated” or “merely coincidental”[.]

Plaintiff asserts that defendant breached the parties’ oral agreement by not paying commissions on wine sales to Kobrand. To prevail on this claim, plaintiff must show that defendant failed to pay commissions due on sales to a distributor that plaintiff identified and solicited for defendant. Plaintiff’s claim has a substantial relationship to defendant’s business activities in New York. Defendant traveled to New York to attend the Great Match Event where plaintiff introduced defendant to Kobrand. Defendant then joined plaintiff in attending two promotional events hosted by Kobrand in New York, which resulted in Kobrand purchasing defendant’s wine and, eventually, entering an exclusive distribution agreement for defendant’s wine in the United States. Those sales to Kobrand — and the unpaid commissions thereon — are at the heart of plaintiff’s claim.

Indeed, contrary to the Appellate Division’s holding, the parties’ oral agreement was not performed “wholly in Spain”…Rather, as set forth above, both sides engaged in activities in New York in furtherance of their agreement. There is an articulable nexus or substantial relationship between defendant’s New York activities and the parties’ contract, defendant’s alleged breach thereof, and potential damages. Accordingly, we hold that plaintiff’s claim arises from defendant’s transaction of business in New York.

 The Court then addressed federal due process concerns:

Exercise of personal jurisdiction under CPLR 302 (a) (1) must also comport with federal due process…We have recognized that CPLR 302 and due process are “not coextensive”; nonetheless, while “personal jurisdiction permitted under the long-arm statute may theoretically be prohibited under due process analysis, we would expect such cases to be rare”[.]

Federal due process requires first that a defendant have “minimum contacts” with the forum State such that the defendant “`should reasonably anticipate being haled into court there’”…and second, that the prospect of having to defend a suit in New York comports with “‘traditional notions of fair play and substantial justice’”[.]

Under the first element, defendant has established minimum contacts with New York by visiting the state on multiple occasions to promote its wine with the purpose of finding a United States distributor and thereafter selling wine to a New York-based distributor.  [D]efendant availed itself of the privilege of doing business in New York by taking “purposeful action, motivated by the entirely understandable wish to sell its products here”…Having done so, defendant could reasonably foresee having to defend a lawsuit in New York.

The second element, in essence, asks whether personal jurisdiction “is reasonable under the circumstances of the particular case”…Where minimum contacts exist, the defendant has the burden to “present a compelling case that the presence of some other considerations would render jurisdiction unreasonable”…On appeal, defendant has not presented any compelling reason why the exercise of jurisdiction is unreasonable…Rather, defendant availed itself of the privilege of conducting business in New York by promoting its wine here, soliciting a distributor here, and selling wine to that New York-based distributor. Therefore, the exercise of long-arm jurisdiction over defendant comports with federal due process.

Burlington Ins. Co. v. NYC Tr. Auth., 2017 NY Slip Op 04384 (June 6, 2017)

Does an insurance policy provide coverage to an additional insured where the policy language limits its application to liability “caused, in whole or in part, by the named insured’s acts or omissions and only the additional insured was negligent?”  Answer:  No, the word “cause” means proximate cause.

A liability insurance policy restricted liability coverage provided to additional insureds to any bodily injury “caused, in whole or in part” by the “acts or omissions” of the named insured.  The Appellate Division interpreted the policy language as extending coverage to an additional insured for an injury caused solely by its own negligence, even where the act of the named insured was not negligent.  The issue divided the Court of Appeals 4-2 with Judges Fahey and Stein dissenting.

The majority opinion summarized the issue presented:

Plaintiff, The Burlington Insurance Company (Burlington), issued an insurance policy to nonparty Breaking Solutions, Inc. (BSI) listing as additional insureds defendants, the New York City Transit Authority (NYCTA) and MTA New York City Transit (MTA). Burlington denied coverage to NYCTA and MTA on the grounds that defendants were not additional insureds within the meaning of the policy because NYCTA was solely responsible for the accident that caused the injury. This appeal requires that we interpret whether the additional insured language of the policy provides coverage where the named insured is not negligent.

The facts:

NYCTA contracted with BSI for BSI to perform tunnel excavation work on a New York City subway construction project. To comply with NYCTA’s requirements, BSI purchased commercial general liability insurance from Burlington with an endorsement that listed NYCTA and MTA as “additional insureds.”  The endorsement was adopted from the latest form issued by the Insurance Services Office (ISO).  The endorsement provides, in relevant part, that NYCTA and MTA are additional insureds:

“…only with respect to liability for ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’ caused, in whole or in part, by:

  1. Your acts or omissions; or”

An NYCTA employee was injured as he tried to avoid an explosion after a BSI machine touched a live electrical cable buried in concrete at the excavation site.  A lawsuit in federal court ensued.

Discovery in that action revealed two internal memoranda in which NYCTA acknowledged its sole responsibility for the accident.  It was undisputed that the BSI employee could not have known about the cable as NYCTA failed to mark its location and failed to turn off the power.

Burlington commenced a declaratory judgment action in state court after disclaiming coverage for NYCTA and MTA. Burlington settled the federal action and amended its state court complaint to recover the settlement payment.  Supreme Court granted Burlington summary judgment, concluding that NYCTA and MTA were not additional insureds because the policy limited liability to instances where BSI, as the named insured, was negligent.

The Appellate Division reversed concluding that while the named insured was not negligent, the act of triggering the explosion was a “cause of injury” within the meaning of the policy.

The Court of Appeals explained the countervailing arguments:

Burlington argues that under the plain meaning of the endorsement NYCTA and MTA are not additional insureds because the acts or omissions of the named insured, BSI, were not a proximate cause of the injury. Put another way, Burlington maintains that the coverage does not apply where, as here, the additional insured was the sole proximate cause of the injury.

In response, NYCTA and MTA also rely on the policy language, but claim that by its express terms the endorsement applies to any act or omission by BSI that resulted in injury, regardless of the additional insured’s negligence. They further argue that the Appellate Division properly concluded that BSI’s operation of its excavation machine provided the requisite causal nexus between injury and act to trigger coverage under the policy.

The Court concluded that:  “[t]here is no coverage because, by its terms, the policy endorsement is limited to those injuries proximately caused by BSI.”

In so doing, it noted:

The policy here states, in relevant part, that an entity is “an additional insured only with respect to liability for `bodily injury’ caused, in whole or in part, by [BSI’s] acts or omissions.” The defendants argue that the endorsement does not limit liability to cases in which an insured’s acts or omissions are negligent or otherwise legally actionable. Essentially, they advocate that “caused, in whole or in part” means “but for” causation. Under their reading of the policy, all that is necessary for an additional insured to be covered is that the insured’s conduct be a causal link to the injury. This is an incorrect interpretation of the policy language, which by its terms, describes proximate causation and legal liability based on the insured’s negligence or other actionable deed.

*     *     *

Here, the Burlington policy endorsement states that the injury must be “caused, in whole or in part” by BSI. These words require proximate causation since “but for” causation cannot be partial. An event may not be wholly or partially connected to a result, it either is or it is not connected. Stated differently, although there may be more than one proximate cause, all “but for” causes bear some connection to the outcome even if all do not lead to legal liability. Thus, these words — “in whole or in part” — can only modify “proximate cause”…Defendants’ interpretation would render this modification superfluous, in contravention of the rule that requires us to interpret the language “in a manner that gives full force and effect to the policy language and does not render a portion of the provision meaningless”[.]

*     *     *

Here, BSI was not at fault. The employee’s injury was due to NYCTA’s sole negligence in failing to identify, mark, or de-energize the cable. Although but for BSI’s machine coming into contact with the live cable, the explosion would not have occurred and the employee would not have fallen or been injured, that triggering act was not the proximate cause of the employee’s injuries since BSI was not at fault in operating the machine in the manner that led it to touch the live cable.

The majority opinion includes a discussion of its refusal to adopt the Appellate Division’s rationale that the phrase “caused by” is not materially different from “arising out of,” the phrase in a prior version of the ISO form endorsement.

Judges Fahey and Stein dissented on the ground that:  “Bedrock principles of insurance contract interpretation demand that we conclude that defendants are entitled to coverage with respect to the underlying matter as additional insureds under the policy of insurance issued to nonparty Breaking Solutions, Inc. (BSI) by plaintiff.”

Reciting the conventional cannons on construction of insurance coverage disputes:

“‘In determining a dispute over insurance coverage, we first look to the language of the policy’”…”An insurance agreement,” as the majority notes, “is subject to principles of contract interpretation”…It also is true that, “`[a]s with the construction of contracts generally, unambiguous provisions of an insurance contract must be given their plain and ordinary meaning, and [that] the interpretation of such provisions is a question of law for the court’”[.]…We recently reiterated that where a “`policy may be reasonably interpreted in two conflicting manners, its terms are ambiguous’”…” ‘the test to determine whether an insurance contract is ambiguous focuses on the reasonable expectations of the average insured upon reading the policy and employing common speech’”…Of course, “‘any ambiguity must be construed in favor of the insured and against the insurer’”[.]

The dissenters concluded that:

Indeed, “the existence of coverage [for defendants as additional insureds] does not depend upon a showing that [BSI’s] causal conduct was negligent or otherwise at fault”…The endorsement confers additional insured status where the mere acts of the named insured cause the bodily injury complained of. If the drafter meant for such status to be contingent upon a negligent act or acts of the named insured, then the policy easily could have said as much. That is, the policy could have afforded additional insured status “only with respect to liability for ‘bodily injury’…caused, in whole or in part, by [the named insured’s negligent] acts or omissions.”

Similarly, if the drafter intended that coverage under the endorsement be contingent upon a showing of proximate cause, as the majority defines that phrase…then the policy easily could have been written to contain that condition. Specifically, the policy could have conferred additional insured status “only with respect to liability for `bodily injury’ [proximately] caused, in whole or in part, by [the] acts or omissions [of the named insured].” Inasmuch as the endorsement contains none of the aforementioned qualifications, the cardinal rules of policy interpretation require that we conclude that defendants are entitled to coverage with respect to the underlying matter as additional insureds under the policy.

With the admonition that:

In multi-jurisdictional commercial transactions, New York law frequently is chosen as the governing law based on its stability and predictability. Insurance coverage matters of this nature perhaps are a small subset of the expansive field of commercial litigation.

Similar to “typical” commercial litigation, however, insurance coverage disputes should be resolved through law that is certain and clear. The majority’s approach could threaten the stability and sureness of our bedrock rules of insurance policy interpretation. Indeed, it is the benefit of certainty in our rules of interpretation, not concern with the occasionally “unanticipated result[]”…to which the application of those rules may lead, that should be of paramount importance here.

Matter of Acevedo v. New York State Dept. of Motor Vehs., 2017 NY Slip Op 03690 (May 9, 2017)

Were recidivist drunk driving offenders entitled to seek restoration of their driving privileges because regulations adopted by the DMV were invalid?  Answer:  No, the Commissioners validly exercised their rule making authority and the regulations were not otherwise improper.

Petitioners’ driver’s licenses were revoked after their most-recent drunk driving convictions; and their re-licensing applications were subsequently denied by the New York State Department of Motor Vehicles.  Pursuant to recently adopted regulations that govern the re-licensing of recidivist drunk driving offenders.  Petitioners challenged the validity of the regulations and sought restoration of their driving privileges.

The Administrative Appeals Board affirmed DMV’s denial of the applications.  Petitioners filed suit in Supreme Court which dismissed the proceedings.  The Appellate Division affirmed, finding that “DMV did not exceed its regulatory authority because ‘it did not act on its own ideas of public policy, but rather implemented the Legislature’s policies of promotion highway safety’”; and “because the Regulations represented ‘an appropriate discretionary determination by the Commissioner’”.

The Court summarized the relevant provisions of the Vehicle Traffic Law:

To combat this persistent threat to public safety, the Legislature has enacted a statutory scheme that criminalizes drunk driving…and sets forth the sanctions — including licensing implications — associated with alcohol- and drug-related violations…Under the Vehicle and Traffic Law, a conviction for a drunk driving offense generally results in the automatic revocation of the offender’s driver’s license, requiring the offender to reapply for a new license. The most common type of revocation is followed by a “minimum” time period — usually 6-18 months — during which the offender is ineligible for a new license[.]

The VTL mandates “[p]ermanent revocation” for certain recidivist offenders — for instance, those who have three drunk-driving convictions in four years, or four drunk driving convictions in eight years…Permanent revocation renders an offender ineligible for relicensing, absent a waiver. Under the VTL, permanent revocation “shall be waived” after a fixed period of time — either five or eight years, depending on the offender’s conduct — and upon satisfaction of specified conditions, “[p]rovided, however, that the commissioner [of the DMV] may, on a case by case basis, refuse to restore a license which otherwise would be restored…in the interest of the public safety and welfare”[.]

As a general matter, once an offender’s license has been revoked — permanently or otherwise — re-issuance of a new license is subject to the discretion of the Commissioner of the DMV [and] “no new license shall be issued after the expiration of the minimum period specified . . . except in the discretion of the commissioner”…The Commissioner’s discretion to reissue a new license — following the prescribed statutory revocation period — is limited only if specified; for instance, the Commissioner is barred from issuing a new license to an offender who has two drunk driving convictions resulting in physical injury to another person[.]

The regulatory scheme:

The Vehicle and Traffic Law authorizes the Commissioner to, “[s]ubject to and in conformity with the provisions of the vehicle and traffic law . . . enact, amend and repeal rules and regulations which shall regulate and control the exercise of the powers of the [DMV] and the performance of the duties of officers, agents and other employees thereof”…This authority includes the power to “promulgate regulations” with respect to the administration of licensing procedures[.]

The Commissioner first promulgated regulations to address post-revocation relicensing in 1980. Those regulations specified that DMV would decline to issue a new license to an applicant who had (i) a “history of abuse of alcohol or drugs . . . with insufficient evidence of rehabilitation”…or (ii) accumulated twenty-five or more “negative safety points” — corresponding to certain VTL violations — within the three years immediately preceding the application[.]

DMV has amended the 1980 regulations a number of times over the years — including in 1982, 2006, and 2011. In 2011, for instance, the regulations were amended to provide that, in considering relicensing applications, DMV would evaluate an applicant’s “entire driving history” for purposes of determining whether the applicant was a “problem driver” who created “an unusual and immediate risk upon the highways”…If so, DMV would deny the application and decline to consider a further application for one year following the denial[.]

The subsequent developments:

According to DMV, the 2011 amendments remained inadequate to address the safety risk posed by recidivist drunk drivers, and DMV’s statistics indicated that a small number of relicensed recidivist drunk drivers remained responsible for a disproportionate number of accidents. In early 2012, DMV “began an extensive review of the processes and criteria used when making relicensing decisions, particularly as they apply to persons applying for relicensing after being revoked for an alcohol- or drugged-driving related offense”…In February 2012, “[i]n the interest of ensuring that drivers with similar records would be treated uniformly,” DMV began holding pending relicensing applications in abeyance if the applicant’s record “contained multiple alcohol-related violations of the Vehicle and Traffic Law”[.]

And the recent amendments to the regulations:

The amendments at issue in these appeals…were adopted as emergency regulations in September 2012 and took effect immediately. In relevant part, the Regulations provide that, “[u]pon receipt of a person’s application for relicensing, the Commissioner shall conduct a lifetime review of such person’s driving record”…The Commissioner “shall deny the application” if “the record review shows that”: (1) the applicant has “five or more alcohol- or drug-related driving convictions or incidents in any combination within his or her lifetime,”…or (2) within a “25 year look back period,” the applicant “has three or four alcohol- or drug-related driving convictions or incidents in any combination” and “one or more serious driving offense”…A “serious driving offense” includes: (i) “a fatal accident”; (ii) “a driving-related Penal Law conviction”; (iii) “conviction of two or more violations for which five or more points are assessed” on the applicant’s driving record; or (iv) “20 or more points from any violations”[.]

For applicants with “three or four alcohol- or drug-related driving convictions or incidents in any combination within the 25 year look back period but no serious driving offenses within the 25 year look back period,” the Regulations provide that the Commissioner “shall deny the application for at least five years” in addition to the minimum statutory revocation period…Following the expiration of this five-year waiting period, “the Commissioner may in his or her discretion approve the application, provided that upon such approval, the Commissioner shall impose the A2 restriction on such person’s license for a period of five years and shall require the installation of an ignition interlock device in any motor vehicle owned or operated by such person for such five-year period”…An A2 restricted license is limited to operation to and from specified destinations — for instance, “the holder’s place of employment or education”[.]

The Commissioner is expressly permitted to “deviate from the general policy” set forth in the Regulations “in the exercise of discretionary authority granted” …Specifically, the Commissioner may approve a relicensing application based on a showing of “unusual, extenuating and compelling circumstances,” in which case “the applicant may be issued a license or permit with a problem driver restriction . . . and may be required to install an ignition interlock device”[.]

The Court of Appeals initially found that the regulations did not conflict with the statutory provisions of the VTL:

Petitioners’ statutory conflict argument relies on the flawed premise that an offender is entitled to relicensing under the VTL upon expiration of the statutory revocation period. Rather, the VTL expressly provides that the statutory revocation periods are “minimum” time periods during which an offender’s driver’s license must remain “revoked”…With respect to the “[r]eissuance of licenses,” the VTL provides that, following “the expiration of the minimum [revocation] period,” relicensing applications are to be decided solely “in the discretion of the commissioner”…By design, then, the statutory scheme contemplates that the Commissioner will have exclusive authority over post-revocation relicensing, and that those relicensing determinations will be discretionary.

We similarly reject petitioners’ contention that VTL § 1193 (2) (b) (12) (b) mandates relicensing where an offender otherwise qualifies for a waiver of permanent revocation under that provision. While VTL § 1193 (2) (b) (12) (b) provides that permanent revocation “shall be waived” under specified circumstances, that statutory mandate remains subject to the discretion of the Commissioner, who “may, on a case by case basis, refuse to restore a license which otherwise would be restored . . . in the interest of the public safety and welfare”…Moreover, petitioners’ reading of VTL § 1193 (2) (b) (12) (b) would accord the Commissioner latitude to exercise direction in the vast majority of relicensing determinations, while mandating relicensing — eliminating the Commissioner’s discretion — for the most dangerous subset of drunk driving offenders, i.e. those subject to statutory permanent revocation. We decline to interpret the VTL in such an implausible manner. Rather, we read VTL § 1193 (2) (b) (12) (b) to provide that the Commissioner may, in her discretion, consider a relicensing application from an offender who is otherwise qualified for a waiver, notwithstanding that offender’s permanent revocation.

Petitioners also argue that the Commissioner has contravened her statutory mandate to exercise discretion on a case by case basis by adopting hard and fast rules that are waivable only under limited circumstances. But contrary to petitioners’ claim, the Commissioner does not abdicate her discretion by formalizing it. By promulgating rules to govern relicensing, the Commissioner ensures that her discretion is exercised consistently and uniformly, such that similarly situated applicants are treated equally. The Regulations also provide notice to the public concerning the Commissioner’s general practices with regard to relicensing. And in any case where the presumptive provisions of the Regulations are, in the Commissioner’s discretion, inappropriate in light of “unusual, extenuating and compelling circumstances,” the Commissioner may, pursuant to the Regulations, “deviate from the general policy”[.]

Rejected Petitioners’ claim that the Regulations amounted to legislative policymaking, not administrative rule-making, in violation of the separation of powers doctrine:

Petitioners next contend that the Regulations amount to legislative policymaking — not administrative rule-making — in violation of the separation of powers doctrine. “[T]he separation of powers doctrine gives the Legislature considerable leeway in delegating its regulatory powers” to an administrative agency to “administer the law as enacted by the Legislature”…As a “creature of the Legislature,” an agency “is clothed with those powers expressly conferred by its authorizing statute, as well as those required by necessary implication”…To that end, an agency is permitted to adopt regulations that go beyond the text of its enabling legislation, so long as those regulations are consistent with the statutory language and underlying purpose[.]

The scope of authority delegated to the Commissioner, particularly with regard to licensing, is broad. The Commissioner has the express authority to issue driver’s licenses…, to suspend or revoke driver’s licenses…, and to decide whether to grant or deny relicensing applications…, including those applications involving alcohol- or drug-related revocations[.]

With respect to license revocation and reissuance, the VTL confers discretionary authority on the Commissioner in a number of ways. For instance, following a permanent license revocation, the Commissioner may refuse to restore an applicant’s license “in the interest of the public safety and welfare,” even if the applicant is otherwise qualified for a permanent revocation waiver…In the context of relicensing determinations following an alcohol- or drug-related revocation, the VTL makes clear that reissuance is — in all cases — subject only to the “discretion of the commissioner”[.]

But no matter how facially broad, the legislature’s grant of authority “must be construed, whenever possible, so that it is no broader than that which the separation of powers doctrine permits”…We have made clear that the legislature “cannot cede its fundamental policy-making responsibility to an administrative agency”…Nor may an agency use its enabling statute “as a basis for drafting a code embodying its own assessment of what public policy ought to be” (id.). To be sure, “it is the province of the people’s elected representatives, rather than appointed administrators, to resolve difficult social problems by making choices among competing ends”[.]

Our separation of powers analysis is guided by the four factors set forth in Boreali v. Axelrod (71 N.Y.2d 1 [1987]). These four factors — or “coalescing circumstances” — are not “discrete, necessary conditions that define improper policymaking by an agency,” nor are they “criteria that should be rigidly applied in every case in which an agency is accused of crossing the line into legislative territory”[.]

Rather, the factors are related considerations, designed to ascertain whether an agency has transgressed the bounds of permissible rule-making[.]

The Court of Appeals then considered the four so-called Boreali factors:  First, “whether the agency merely ‘balance[d] costs and benefits according to preexisting guidelines,’ or instead made ‘value judgments entailing difficult and complex choices between broad policy goals to resolve social problems’”.  Second, “whether the agency wrote on ‘a clean slate, creating its own comprehensive set of rules without the benefit of legislative guidance,’ or whether it simply “fill[ed] in the details of broad legislation describing the over-all policies to be implemented’”.  Third, “whether the legislature has unsuccessfully tried to reach agreement on the issue, which would indicate that the matter is a policy consideration for the elected body to resolve”.  And fourth, “whether any ‘special expertise or technical competence’ was involved in the development of the challenged Regulations”.  The Court concluded that:

On balance, the Boreali factors overwhelmingly weigh in favor of DMV. Though the line between administrative rule-making and legislative policy-making may be “difficult to define”…here, the Regulations fall squarely within the bounds of valid administrative action. The legislature delegated clear authority to the Commissioner over post-revocation relicensing applications and, in enacting the Regulations, the Commissioner acted squarely within the confines of that authority. Boreali is not “an escape hatch for those” — like petitioners — “who are unhappy with a regulation”…Accordingly, we hold that the Regulations were a valid exercise of the Commissioner’s rule-making authority, consistent with the separation of powers doctrine. We reject petitioners’ claim to the contrary.

The Court of Appeals then addressed Petitioners’ contention that the Regulations were arbitrary and capricious and could not withstand rational basis scrutiny, concluding that Petitioners had failed to meet their heavy burden of showing that the Regulations were “so lacking in reason” that they were “essentially arbitrary”.

Finally, the Court of Appeals rejected Petitioners’ argument that denial of their relicensing applications constitutes an impermissible retroactive application of the Regulations, concluding that:

While New York law does not favor retroactive operation, the Regulations were not impermissibly applied retroactively to petitioners’ applications simply because the Commissioner considered prior conduct — namely, petitioners’ drunk driving offenses — that predated the Regulations. As we have previously noted, regulations are not retroactive “when made to apply to future transactions merely because such transactions…are founded upon antecedent events”.

People v. Viruet, 2017 NY Slip Op 04386 (June 6, 2017)

When the police lose a video recording of the crime, is the defendant entitled to an adverse inference charge?  Answer:  Yes, but in this case the error was harmless so a new trial was not required.

Viruet was convicted, after a jury trial, of a fatal shooting; however, video surveillance footage of the crime was lost prior to trial.  As the majority and dissenting opinions both note, identification of the shooter was a contested issue.

The case arose out of a late-night shooting outside a nightclub in Queens:

Earlier on the evening of the shooting, defendant’s brother, Stephen, was struck by an unknown assailant outside of the club. When the club’s bouncer was unable to identify the assailant, Stephen called defendant and asked him to come to the club. According to the bouncer, a short time later defendant pulled up to the front of the club in a dark colored Honda, got out, and immediately confronted him, demanding to know who hit his brother. Several people from inside the club surrounded defendant prompting him to drive off. As defendant drove away, however, he warned that he was “coming back.” Approximately 10 to 15 minutes later, someone near the club yelled “they’re back.” At that moment, the victim, the bouncer, and another witness, were standing by the front entrance of the club when an individual across the street fired nine shots in their direction. The 19-year-old victim, who was trying to get through the door into the club, was shot and died a short time later.

The club’s bouncer identified defendant in a photo array hours after the shooting and in a lineup following defendant’s arrest approximately two months later. He testified at trial that although he did not see the shooter’s face completely, he “could tell by what [the shooter] was wearing and the way he looked that it was the same person that was driving the [Honda].” However, he admitted on cross-examination that despite his prior identifications, he could not say for sure whether defendant was the shooter by looking at his face because he “didn’t see across the street.” The other witness, in identifying defendant, testified that he had a “good view” of defendant at the time of the shooting, could see where the bullets were coming from, and was able to observe defendant’s face. Although the witness did not know defendant, he knew defendant’s brother “from around the way,” and had seen him on 2 or 3 prior occasions.

*     *     *

The People also called one of defendant’s childhood friends who had been arrested approximately two months after the shooting on an unrelated gun charge. Pursuant to a plea deal, the witness agreed to testify for the prosecution at defendant’s trial. According to his detailed testimony, the day after the shooting, defendant confessed that he and his brother were involved in an altercation at the club and that defendant had fired his weapon “in th[e] direction” of someone who was yelling at him.

Defendant requested a copy of the club’s surveillance footage from the front door.  The police had made a copy of the footage but did not voucher it and had lost it by the time of the request.  The People offered evidence that the images did not capture the shooter’s identity but that it recorded the victim, bouncer and a trial witness as the shooting occurred.  No evidence was offered about whether the earlier confrontation had been recorded.

Defendant timely requested an adverse interest charge, i.e., that the jury could assume that the recording was beneficial to defendant.  The Court rejected the request because no testimony was offered that the video would help identify the shooter.  Defendant was convicted of murder and gun possession.  The Appellate Division affirmed.

The majority opinions sets forth the legal template:

Defendant relies on our decision in People v. Handy, pointing to our holding that “when a defendant in a criminal case, acting with due diligence, demands evidence that is reasonably likely to be of material importance, and that evidence has been destroyed by the State, the defendant is entitled to an adverse inference charge”…In such circumstances, the charge is no longer “discretionary,” but is “mandatory upon request”…We agree that the rule in Handy applies here and that failure to give the instruction was error.

*     *     *

Under these circumstances — where defendant acted with due diligence by requesting the evidence in discovery and the lost evidence was video footage of the murder defendant was charged with committing — it cannot be said that the evidence was not “reasonably likely to be of material importance”…According to the trial testimony, the camera captured the moment when the victim was shot and the location of the two eyewitnesses at the time of the shooting. There was also testimony that the video contained footage of people going in and out of the club throughout the course of the night, making it at least possible that the video captured the earlier incident involving defendant and the bouncer — a key issue in the sequence of events. Contrary to the determination of the Appellate Division, a video of the shooting and of the eyewitnesses at or around the time of the murder is certainly “relevant to the case”…and is sufficient to satisfy the standard set out in Handy. Moreover, as in Handy, testimony concerning what appeared on the video came in large part from a witness whose own actions “created the need to speculate about its contents”…Accordingly, the trial court erred in failing to give an adverse inference instruction.

Defendant’s victory on the error question was a pyrrhic one, however:

[G]iven the strength of the People’s case, the error was harmless. “Errors of law of non-constitutional magnitude may be found harmless where `the proof of the defendant’s guilt, without reference to the error, is overwhelming’ and where there is no `significant probability . . . that the jury would have acquitted the defendant had it not been for the error’”[.]

In addition to the eyewitness accounts described above, the People presented testimony that defendant confessed to the shooting. That witness’s account was consistent with the version of the relevant events provided by the witnesses to the shooting. Additionally, the shooting occurred less than 20 minutes after an earlier altercation at the club ended with defendant threatening to return and immediately after someone nearby yelled “they’re back.” In light of this proof, such a permissive adverse inference instruction to the jurors that they might have but were not required to infer that the lost video would have been favorable to the defense would not have created a “significant probability . . . that the jury would have acquitted defendant” [.]

Judges Wilson and Stein dissented as to the harmless error analysis.  Judge Wilson wrote:

I do not agree with the majority, however, that the error was harmless. In situations where evidence of guilt is overwhelming, “an error is prejudicial [to the defendant]…if the appellate court concludes that there is a significant probability, rather than only a rational possibility, in the particular case that the jury would have acquitted the defendant had it not been for the error or errors which occurred”…However, “unless the proof of the defendant’s guilt, without reference to the error, is overwhelming, there is no occasion for consideration of any doctrine of harmless error”…”‘[O]verwhelming proof of guilt’ cannot be defined with mathematical precision” and “does not invite merely a numerical comparison of witnesses or of pages of testimony”…Instead, “the nature and the inherent probative worth of the evidence must be appraised. As with the standard, `beyond a reasonable doubt’, the recourse must ultimately be to a level of convincement”…Thus, to be overwhelming, “the quantum and nature of proof, excising the error, [must be] so logically compelling and therefore forceful in the particular case as to lead the appellate court to the conclusion that a jury composed of honest, well-intentioned, and reasonable men and women on consideration of such evidence would almost certainly have convicted the defendant”…Here, the majority’s recitation of the facts paints an incomplete picture, and effectively substitutes this Court for the trier of fact. Although the evidence would support a jury verdict of guilt, it was not overwhelming.

The dissenting opinion explains, at length, the issues with the evidence offered by the People against the defendant.  The record contained numerous of examples where the eyewitness identification could be questioned.  The dissent noted that the defendant and his brother Stephen looked similar.  It also discussed the testimony of an alibi witness that defendant dropped Stephen and a friend three blocks from the club and then drove the witness an additional ten blocks.  The dissent concluded:

Given the standard of proof beyond a reasonable doubt, the totality of the evidence in this case would support a verdict of either guilt or innocence. The evidence established that defendant and his look-alike brother were in the vicinity of the crime; defendant had just been searched at a different club and then by the police, who found no weapon; and defendant’s brother had more of an altercation at the club than did defendant. The majority cites the eyewitness accounts and defendant’s statements made to Jesse Garcia in support of its conclusion that the evidence in this case was overwhelming…However, “mistaken eyewitness identifications play a significant role in many wrongful convictions”…Here, the eyewitnesses essentially conceded that defendant and his brother could be mistaken for one another. Further, neither could conclusively say that defendant actually committed the crime — Mr. Herbert did not see the shooter’s face, and Mr. White, who testified that he saw the gunman’s face in the dark from across the street, did so for only “split seconds” before running away into the bar under stressful and chaotic circumstances including gunfire. As to Jesse Garcia, he raised his account of defendant’s confession with the police only after he had been arrested and was facing up to 15 years in prison. A jury could plausibly credit or discredit any of this testimony.

That the shooting occurred 20 minutes after defendant and his brother had left the nightclub lends just as much support, if not more, to the defense’s theory that someone else committed the shooting — namely, Stephen. Defendant dropped off Stephen and Stephen’s friend only three blocks from the nightclub and then drove 10 more blocks to drop off Robert. Additionally, just prior to the shooting, someone yelled “they’re back” — not “he’s back.” Thus, it is just as plausible that Stephen and his friend — who were just a few blocks away — returned to the nightclub, and not defendant.

Where, as here, evidence, even if substantial, is not overwhelming, that ends the harmless error inquiry, and defendant is entitled to a new trial. To act otherwise is to usurp the jury’s role as trier of fact. The question is not whether we think that giving the requested instruction would have changed the outcome: that question is for the jury to determine on retrial, weighing it along with the evidence and other instructions[.]

People v. Anderson, 2017 NY Slip Op 02589 (April 4, 2017)

Is it proper to use a visual demonstration during summation in a criminal case?  Answer:  Yes, so long as there is a clear delineation between argument and evidence.

Defendant was convicted, upon a jury verdict of attempted murder and criminal possession of a weapon.  Defendant argued that he was deprived of a fair trial by the prosecutor’s use of “slides” during summation.

The Court of Appeals summarized the facts at trial:

[O]n March 14, 2010, on a Brooklyn street, defendant approached Erick Brown-Gordon, who was dating defendant’s ex-girlfriend Diana Perez, and shot him twice in the abdomen. When Brown-Gordon turned around and tried to flee, defendant shot him twice more, in the back. Defense counsel argued at trial that Perez and Brown-Gordon were not credible witnesses and had falsely identified defendant.

The applicable law as applied to the facts of the case:

In People v. Ashwal…this Court explained that it is “fundamental” that counsel must stay within “the four corners of the evidence” during summation and that the prosecutor “may not refer to matters not in evidence or call upon the jury to draw conclusions which are not fairly inferable from the evidence”…As we observed in People v. Santiago…PowerPoint “slides depicting an already admitted photograph, with captions accurately tracking prior testimony, might reasonably be regarded as relevant and fair commentary on the evidence, and not simply an appeal to the jury’s emotions.”

Explaining that:

At bottom, a visual demonstration during summation is evaluated in the same manner as an oral statement. If an attorney can point to an exhibit in the courtroom and verbally make an argument, that exhibit and argument may also be displayed to the jury, so long as there is a clear delineation between argument and evidence, either on the face of the visual demonstration, in counsel’s argument, or in the court’s admonitions. We reject defendant’s position that trial exhibits in a PowerPoint presentation may only be displayed to the jury in unaltered, pristine form, and that any written comment or argument superimposed on the slides is improper. Rather, PowerPoint slides may properly be used in summation where, as here, the added captions or markings are consistent with the trial evidence and the fair inferences to be drawn from that evidence. When the superimposed text is clearly not part of the trial exhibits, and thus could not confuse the jury about what is an exhibit and what is argument or commentary, the added text is not objectionable. The slides, in contrast to the exhibits, are not evidence. The court properly instructed the jury that what the lawyers say during summations is not evidence, and that in finding the facts, the jury must consider only the evidence. In this case, as was appropriate, the jury was told that the physical exhibits admitted into evidence would be made available to them, while the slides were not supplied to the jury during deliberations.

Judge Rivera, joined by Judge Fahey, dissented stating that:

The prosecutor’s use of digitally edited reproductions of exhibits to convey inferences and misinformation, as well as to project defendant’s image as the “face of death,” exceeded the bounds of proper summation. A prosecutor may not use altered copies of exhibits to suggest that the evidence unequivocally establishes disputed facts or to distract the jury by playing to emotion. That, however, is what happened here.

The PowerPoint presentation employed by the prosecutor during summation included a modified version of defendant’s arrest photograph, with the picture of his head at the center of a symbolic target. This target was surrounded by eight boxes containing both facts of the case and the prosecutor’s inferences and mischaracterizations of the evidence, all pointing directly at defendant’s face. The reimagining of defendant’s likeness — through a powerful visual medium — distracted the jury from the unaltered trial evidence and the relevant facts, and was accompanied by the prosecutor’s verbal statements that appealed to passion, not reason.

The error was compounded by the prosecutor’s showcase of edited medical exhibits in two additional slides. The slides of the victim’s hospital records contained superimposed words and numbers which, in the context of the presentation, misled the jury as to what the actual exhibits showed in order to suggest that certain disputed facts were conclusively established at trial, and to thereby bolster witness testimony. These alterations were the equivalent of using unadmitted evidence.

The strategic use of technology to display visual images enhanced the prejudicial impact of the edited reproductions of these exhibits, and when combined with defense counsel’s failure to object to the offensive PowerPoint slides, denied defendant a fair trial. Even in the face of earnest efforts to make the distinction between admitted evidence and argument clear, overlaying evidence with embedded inferences presents issues that cannot be overcome through jury instruction. I would reverse and remit for a new trial.

With the admonition that:

Given the potential that crafted visual demonstrations have to influence the viewer differently and more memorably than the listener of words spoken without visual accompaniment, in order to “stay within the four corners of the evidence,” a prosecutor may display an image of an altered exhibit if the edited version: is intended to assist the jury with its fact-finding function, as opposed to drawing the jury’s attention away from the relevant issues through prejudicial rhetoric; expresses information that places the exhibit’s relevance in context, such as how the exhibit relates to the question of defendant’s guilt; accurately and precisely reflects the admitted testimony and documentary evidence, as in the case of superimposed text of a direct quote; or draws attention to some relevant aspect of the exhibit with, for example, arrows, circles, or underlines. Such overlays do no more than represent and organize the evidence clearly and in a manner that the prosecutor believes will ultimately persuade the jury to convict.

By contrast, the prosecutor may not seek to influence the jury’s deliberative process by taking an exhibit, copying or enlarging it, and then superimposing on the image inferences to be drawn from the evidence about defendant’s guilt. An image of an exhibit embedded with an inference enhances the risk that jurors will treat the inference as an undisputed fact, especially where the image is presented alongside reproductions of other exhibits that contain superimposed testimony. In that way, the altered image elevates argument into fact. Allowing such images also increases the risk that unreasonable inferences will be adopted by the jury. Similarly, the prejudicial impact of inferences that appeal to emotion rather than fact is amplified when combined with a visual image. While a phrase mentioned once in passing may not leave an indelible mark or be sufficiently egregious on its own to sway the jury, the odds that an inflammatory remark will be noted, remembered, and revisited during the deliberative process increase when that remark is presented visually on an edited exhibit[.]

People v. Williams, 2017 NY Slip Op 02588 (April 4, 2017)

Is a defendant deprived of a fair trial where the prosecution uses annotated images of trial exhibits during summation that constituted improper comment on the evidence?  Answer:  No, where the trial court sustained defense counsel’s objections and gave strong instructions concerning the role of summation.

Defendant was convicted, after a jury trial, of various offenses, including burglary and assault.  In a Decision released on the same date as the opinion in People v. Anderson, the Court of Appeals addressed defendant’s contention that he was deprived of a fair trial by the PowerPoint presentation, particularly insofar as it displayed slides that contained annotated images of trial exhibits.

The Court summarized the facts:

Shortly after midnight on December 20, 2009, several men broke into the victim’s apartment. The victim, who knew defendant from the neighborhood, recognized defendant as one of the intruders who attacked him. Defendant shot the victim, cut him with a knife and poured bleach over his head. The victim testified at trial that he had been on the telephone with his brother when the men burst into his apartment.

At trial, the People introduced surveillance footage of the street and sidewalk where the victim lived from cameras located on the building neighboring the victim’s apartment, as well as still photographs from that footage…It was snowing heavily at the time of the offense and the video depicts six individuals in hooded clothing walking along the sidewalk through the snow. At one point, the video shows an SUV driving down the block. After the SUV proceeded through the traffic light at the corner, the six individuals can be seen running into what appears to be the victim’s building. A short time later, the camera shows the individuals exiting the building and running away.

The victim’s brother testified about the phone call at the time of the attack.  He testified that he was driving an SUV that “looked like” the one in the video, he observed people on the street wearing hooded clothing and thought he saw the defendant in the group.  He was unable to positively identify either the SUV or that the defendant was in the group he encountered.

Before the closing arguments the trial court gave the jury detailed preliminary instructions, including the admonition that summation is simply argument:

In summation, the prosecutor displayed a PowerPoint presentation containing slides of images of the trial exhibits, some of which had been annotated through the PowerPoint program with text, circles or arrows. Significantly, the prosecutor displayed slides depicting the still photographs from the surveillance video that he had showed the victim’s brother, which had been annotated with captions such as, “[the victim’s brother’s t]ruck” and “[the victim’s brother] sees Defendant,” despite the witness’s inability to make those definitive identifications in his trial testimony. Defense counsel raised objections at various points, several of which were sustained. In addition, the trial court voiced its own concerns, at one point telling the jury to disregard the prosecutor’s annotations to the images of the trial exhibits. The court ultimately curtailed the PowerPoint presentation because of those annotations, stating that it was “not allowing any more . . . superimposed words.”

The proceedings and motion in Supreme Court:

Following summations, defense counsel moved for a mistrial, arguing that there had been improper comment in several areas. Although the court indicated that it was “sympathetic” to certain of defendant’s arguments, it denied the mistrial. When the court asked whether defendant “want[ed] anything short of a mistrial,” counsel declined. Defendant was convicted of burglary in the first degree, assault in the second degree and criminal possession of a weapon in the second degree. The jury acquitted him of robbery in the first, second and third degrees.

The Appellate Division affirmed, holding that Defendant was not deprived of a fair trial by either the PowerPoint presentation or the prosecutor’s summation, stating:

It is well-settled that attorneys are entitled to broad latitude in commenting on pertinent matters of fact in summation, so long as they limit themselves to relevant matters within the four corners of the evidence…”[T]he District Attorney may not refer to matters not in evidence or call upon the jury to draw conclusions which are not fairly inferable from the evidence. Above all, he [or she] should not seek to lead the jury away from the issues by drawing irrelevant and inflammatory conclusions which have a decided tendency to prejudice the jury against the defendant”…When determining whether improper statements deprived a defendant of a fair trial, we have considered it to be of “vital significance whether the trial court . . . `gave standing to the statement of the District Attorney as legitimate argument’” or whether the court took prompt corrective action, such as issuing a curative instruction[.]

The Court of Appeals noted:

There is no inherent problem with the use of a PowerPoint presentation as a visual aid in connection with closing arguments. Indeed, it can be an effective tool. But, the long-standing rules governing the bounds of proper conduct in summation apply equally to a PowerPoint presentation. In other words, if it would be improper to make a particular statement, it would likewise be improper to display it…If counsel is going to superimpose commentary to images of trial exhibits, the annotations must, without question, accurately represent the trial evidence…Moreover, any type of blatant appeal to the jury’s emotions or egregious proclamation of a defendant’s guilt would plainly be unacceptable[.]

Concluding that:

Here, defendant argues that he was deprived of a fair trial by the annotation of images of the trial exhibits to imply that the victim’s brother, in his testimony, had positively identified either his truck or defendant from the surveillance video because this misrepresented the witness’s testimony. Significantly, the trial court was very attuned to the annotated slides and, in the exercise of its discretion, ultimately stopped the slideshow and instructed the jury to disregard the slides…To the extent any slides may have misrepresented the trial evidence, the trial court instructed the jury on more than one occasion that the attorneys’ arguments were not evidence and that the jury was the sole judge of the facts. Defense counsel also rejected the court’s offer of any less drastic relief after the denial of the mistrial motion. Thus, under these circumstances, defendant was not deprived of a fair trial.

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