Relates to the scope of non-final judgments and orders.
Sponsor: BONACIC Committee: JUDICIARY
Law Section: Civil Practice Law and Rules
Law: Amd S5501, CPLR
Law Section: Civil Practice Law and Rules
Law: Amd S5501, CPLR
- Mar 8, 2012: REFERRED TO JUDICIARY
S6648-2011 MeetingsJudiciary: Apr 26, 2012
BILL NUMBER:S6648 TITLE OF BILL: An act to amend the civil practice law and rules, in relation to the scope of review of non-final judgments and orders This is one in a series of measures being introduced at the request of the Chief Administrative Judge upon the recommendation of her Advisory Committee on Civil Practice. This measure would add a new subdivision (e) to CPLR � 5501 in relation to the scope of review of non-final judgment and orders. It would also permit appellate review of a non-final judgment or order that does not "necessarily affect" a final judgment. Pursuant to the decision of the Court of Appeals in Matter of Aha, 39 N.Y.2d 241, 248 (1976), the right to appeal from an intermediate order or judgment terminates with the entry of a final judgment. In certain instances, this can eliminate a party's right to appellate review where the non-final order or judgment in question does not "necessarily affect" the final judgment, so as to be brought up for review by an appeal from the final judgment pursuant to CPLR �5501(a)(1). For example, an order imposing sanctions on an attorney or litigant would not necessarily affect a final judgment so as to be subject to review in the context of an appeal from the final judgment. Likewise, an order dismissing a cross-claim or third-party claim for indemnification would not necessarily affect a final judgment entered in favor of the plaintiff. Therefore, even if an appeal from such an order had been fully briefed and argued, but not decided at the time of entry of a final judgment, appellate review would be foreclosed. The occasionally Draconian impact of Matter of Aho Was addressed by the Appellate Division, First Department in Siegmund Strauss, Inc. v. East 149th Realty Corp., 81 AD.3d 260 (1st Dept. 2010), which took the unusual step of suggesting an amendment to CPLR � 5501(c). Siegmund Strauss arose out of a failed business merger between the plaintiff and two other businesses owned by the individual defendants. Plaintiff brought an action for a declaratory judgment declaring that it Was the rightful tenant of the premises where the businesses operated. Defendants, who had been locked out of the premises and terminated from their employment with plaintiff at that point, asserted counterclaims for fraud, conversion and tortious interference with Contractual relations. After the landlord terminated its lease with one of the defendants' businesses on the ground that it had an illegal sublet, and entered into a new lease with Strauss, defendants served an amended answer, counterclaim, cross claim and third-party complaint, but did not assert a claim for breach of contract. Subsequently, Supreme Court granted Strauss's motion to dismiss the counterclaims and third-party complaint. After Strauss filed its note of issue, defendants moved for leave to amend their answer, counterclaims and third-party complaint to assert, among other things, claims for breach of contract against Strauss and its principals. After the court denied the motion, defendants filed a notice of appeal, but did not perfect the appeal, opting instead to appeal from the final judgment. Following a bench trial, the court issued an order declaring that Strauss was entitled to possession of the premises pursuant to its lease with the landlord, and that defendants had no interest in the lease of the property. Defendants appealed from the judgment, asserting that it brought up for review the prior orders dismissing their claims and denying their motion to amend their answer. The Appellate Division, First Department, in an opinion by Justice McGuire, reluctantly concluded that although defendants had apparently not received appropriate compensation for their businesses as a result of the failed merger, they had no means of appellate review. The orders did not necessarily affect the final judgment, because even if defendants' claims were reinstated and they were allowed to pursue a claim for breach of contract, the judgment declaring Strauss entitled to possession of the leased premises would still stand. Nor did the fact that defendants had also moved for more time to perfect the appeal from the orders and consolidate it with the appeal from the judgment permit review of the orders since the right to appeal from the orders terminated with entry of the final judgment under Matter of Aho. It was the apparent unfairness of this result that prompted the Appellate Division to suggest an amendment to circumvent Matter of Aho: [t]he rule of Matter of Aha... presents a fatal problem for litigants who take an interlocutory appeal from an order that does not necessarily affect the final judgment only to have final judgment entered before the interlocutory appeal is decided. However erroneous the order may be, they irrevocably lose their right to appellate review once final judgment is entered, regardless of whether they would obtain substantial relief if the order were reversed and even if they diligently pursued their interlocutory appeal. Moreover, given that final judgment might have been entered when the appellate court was on the verge of issuing a decision resolving the interlocutory appeal, judicial economy considerations can be undercut by the rule of Matter of Aha. For these reasons, the Legislature might wish to consider another amendment to CPLR 5501(c) giving appellate courts discretion to review the order notwithstanding entry of final judgment. Without such an amendment, litigants in this position can protect their interlocutory appeal only by moving in the trial court for an order staying entry of the judgment. Siegmund Strauss, Inc., 81 A.D.3d at 267. Although the Appellate Division in Siegmund Strauss suggested an amendment to CPLR � 5501(c), we believe that a new subdivision (e) is a more appropriate way to address this issue. Subdivision (c) pertains only to appeals to the Appellate Division, not the Appellate Term. Subdivision (e) would encompass appeals from non-final judgments and orders in both the Appellate Division and the Appellate Term. This measure would also delete the words "which necessarily affects the final judgment" from the first line of subdivision (a)(1). The case law is very inconsistent as to what "necessarily affects the final judgment." For example, an order denying a change of venue was held to "necessarily affect" the final judgment and, thus, be reviewable (Matter of Aha, 39 N.Y.2d 241,248 ), while an order deciding a motion for a preliminary injunction has been held to be non-reviewable. Cinerama, Inc. v. Equitable Life Assurance Soc., 38 A.D.2d 698,699 (151 Dept. 1972). The lack of clarity in the case law results in appeals being taken and dismissed, with a consequent waste of time and money for litigants and their counsel and unnecessary work for the appellate courts that must deal with such appeals. The proposed change will make any non-final judgment or order reviewable on an appeal from a final judgment. This measure would have no fiscal impact on the State. It would take effect on the first of January next succeeding the date on which it shall have become law and apply to all actions commenced on or after such effective date. LEGISLATIVE HISTORY: None. New proposal.
S T A T E O F N E W Y O R K ________________________________________________________________________ 6648 I N SENATE March 8, 2012 ___________ Introduced by Sen. BONACIC -- (at request of the Office of Court Admin- istration) -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the civil practice law and rules, in relation to the scope of review of non-final judgments and orders THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS:
Section 1. Paragraph 1 of subdivision (a) of section 5501 of the civil practice law and rules is amended to read as follows:
1. any non-final judgment or order [
which necessarily affects the final judgment,] including any which was adverse to the respondent on the appeal from the final judgment and which, if reversed, would entitle the respondent to prevail in whole or in part on that appeal, provided that such non-final judgment or order has not previously been reviewed by the court to which the appeal is taken; S 2. Section 5501 of the civil practice law and rules is amended by adding a new subdivision (e) to read as follows:
(E) NON-FINAL JUDGMENTS AND ORDERS. THE ENTRY OF A FINAL JUDGMENT SHALL NOT AFFECT THE APPEALABILITY OF A PARTY'S PENDING APPEAL OF ANY NON-FINAL JUDGMENT OR ORDER. S 3. This act shall take effect on the first of January next succeed- ing the date on which it shall have become a law and apply to all actions commenced on or after such effective date. EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD14023-01-2