Gordon v. Marrone

• Decision Date: 31 March 1992
• Parties: Application of Allan S. GORDON, Petitioner, For a Judgment Pursuant to Article 78 of the CPLR, v. Anna Maria MARRONE, as the Tax Assessor of the Town of North Castle, County of Westchester, State of New York and the Nature Conservancy, Respondents.
• Court: New York Supreme Court

Page 649

590 N.Y.S.2d 649

155 Misc.2d 726

Application of Allan S. GORDON, Petitioner For a Judgment Pursuant to Article 78 of the CPLR, v. Anna Maria MARRONE, as the Tax Assessor of the Town of North Castle, County of Westchester, State of New York and the Nature Conservancy, Respondents.

Supreme Court, Westchester County March 31, 1992.

Fulbright & Jaworski, New York City, for petitioner.

Stephens, Buderwitz & Baroni, White Plains, for respondent Marrone.

Sive, Paget & Riesel, P.C., New York City, for respondent Conservancy.

Robert Abrams, Atty. Gen. by Nancy Stearns, New York City, amicus curiae.

Scenic Hudson, Inc., the Sierra Club and the Nat. Resources Defense Council, Inc. by Toni C. Hamburg and Caroline L. Orlando, New York City, amici curiae.

NICHOLAS COLABELLA, Justice.

Does the award of attorney's fees and expenses under 22 N.Y.C.R.R. subpart 130- 1 for frivolous conduct, based on the prosecution of a colorable claim for an improper purpose, violate the petition clause of the First Amendment? This question arises, among others, in the context of what this Court has previously characterized as a SLAPP suit, an acronym for Strategic Lawsuit Against Public Participation. In a case of apparent first impression in this State, the Court answers in the negative.

Petitioner is a nonresident owner of 158.74 acres of land in the Town of North Castle--approximately 1% of the real property in the Town--and a self-professed real estate investor. Respondent Nature Conservancy ("Conservancy") is a not-for-profit corporation engaged in the management and stewardship of the Mianus River Gorge Wildlife Refuge and Botanical Preserve comprised of 569 acres of undeveloped forest and woodlands along the Mianus River and its tributaries in the Towns of North Castle, Bedford and Pound Ridge. Nationally, the Conservancy is involved in the preservation of over 5.5 million acres--owning or managing some 1100 individual nature preserves.

In the past several years, the Conservancy has actively opposed the subdivision of a thirty-six acre parcel of property owned by petitioner that lies directly across from the Preserve's trail entrance. The Conservancy has participated in proceedings under the State Environmental Quality Review Act, and intervened in two proceedings brought pursuant to CPLR article 78 by petitioner against the Planning Board of the Town of Bedford.

Petitioner, in turn, brought this proceeding to contest an exemption from real property taxes granted by the Town of North Castle to the Conservancy for a four acre parcel located across from the Preserve known as the Gibb House parcel. The Gibb House parcel was afforded the exemption by respondent Marrone, the Tax Assessor, on the basis that it acted as the Preserve's administrative center and provided housing for the Preserve's full-time steward.

This Court ruled there was a rational basis for the exemption and declared petitioner's challenge to be frivolous on the basis that it was brought primarily to harass or maliciously injure the Conservancy for opposing petitioner's efforts to develop the area near the Mianus River Gorge by forcing it to incur the expense of defending the exemption. The Court awarded attorney's fees and legal expenses pursuant to 22 NYCRR subpart 130-1 based solely on petitioner's improper purpose (151 Misc.2d 164, 573 N.Y.S.2d 105). Petitioner now moves to reargue the award of attorney's fees and expenses. For purposes of reargument, petitioner assumes the correctness of the Court's finding as to his motivation in bringing this proceeding.

I

Petitioner argues an award based solely on improper motives is constitutionally proscribed by the petition clause of the First Amendment of the U.S. Constitution, which guarantees the "right * * * to petition the Government for a redress of grievances," because it has a chilling effect on the right of access to the Courts. ¹ Petitioner contends the right of access should be protected in instances in which the Court is considering an award of attorney's fees and expenses for frivolous conduct by limiting an award to where the litigation can be found to lack a reasonable basis in fact or law and to have been brought in bad faith. This position is purportedly reflected in precedent construing Federal Rules of Civil Procedure rule 11 ² in which notwithstanding separate bases for an award of fees in Rule 11 similar to 22 NYCRR subpart 130-1, several of the federal circuits have construed Rule 11 to preclude a finding of improper purpose in the filing of a complaint if the claim asserted has a reasonable basis in fact or law. ³ Petitioner proffers that such precedent is applicable in considering 22 NYCRR subpart 130-1 because the latter was modeled after Rule 11. ⁴ [The Court's discussion of specific federal cases construing Rule 11 has been omitted from publication, but is briefly summarized in fn 3.]

Significantly, none of the federal precedents cited by petitioner, even those which apply a limited construction of Rule 11 in reviewing a complaint, discuss the petition clause. Their analysis is based strictly on the language and legislative history of the Rule. Even assuming protection of the right of access was at the heart of those cases limiting Rule 11, there is no parallel at bar. A special proceeding is summary in nature (Gagnon v. Board of Education of the Manhasset Union Free School District, 119 A.D.2d 674, 500 N.Y.S.2d 801; 22 Park Place Cooperative v. Board of Assessors, 102 A.D.2d 893, 476 N.Y.S.2d 935; see also, Port of New York Authority v. 62 Cortlandt Street Realty Co., 18 N.Y.2d 250, 273 N.Y.S.2d 337, 219 N.E.2d 797), petitioner has not been deprived of access to the Courts, and the proceeding was heard and disposed of on the merits.

The precedential value of cases construing Rule 11 is also not as compelling as petitioner suggests for the reason that subpart 130-1 is clearly broader in reach than Rule 11. Section 130-1.1(c) defines conduct as frivolous if:

(1) it is completely without merit in law or fact and cannot be supported by a reasonable argument for an extension, modification or reversal of existing law; or

(2) it is undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another.

By embracing frivolous conduct undertaken for improper purpose without limitation to specific acts as in the case of Rule 11, i.e. filing, it permits the Court to consider more varied conduct. The Court may consider events separately or within the context of the entire litigation. This is an important difference as frivolity may not always be immediately apparent. In an effort to avoid chilling legitimate advocacy, Courts often initially allow the benefit of the doubt. But such largesse does not mean that such conduct is or should be immunized from later judicial scrutiny [see, § 130-1.1(c) ].

Certainly, there is ample precedent for the Courts to assess conduct within the larger scope of the overall litigation. The Supreme Court noted, for example, in Bill Johnson's Restaurants, Inc. v. National Labor Relations Board, 461 U.S. 731, 103 S.Ct. 2161, 76 L.Ed.2d 277 that an award of attorney's fees and expenses could be made at the dispositional stage upon finding that the employer's lawsuit, although facially colorable, lacked merit and had an improper motive (461 U.S. at 747, 103 S.Ct. at 2172). The Court stated that, at that time, "(t)he employer's suit having proved unmeritorious, the Board would be warranted in taking that fact into account in determining whether the suit had been filed in retaliation ... If a violation is found, the Board may order the employer to reimburse the employees whom he had wrongfully sued for their attorney's fees and other expenses" (461 U.S. at 747, 103 S.Ct. at 2172). The term "unmeritorious", as used by the Court refers merely to a losing claim, not a claim lacking any basis in fact or law.

Nothing in subpart 130-1 requires the Court to ignore evidence of subjective bad faith. To the contrary, the use of the term "maliciously" in § 130-1.1(c)(2) appears intended precisely to invite consideration of such evidence. The same inference may be drawn from the dual direction in that section to consider whether the frivolous "conduct was continued when its lack of legal or factual basis was apparent or should have been apparent to counsel". Concededly, the existence of a colorable claim should give the Court pause in considering an illicit motivation, but to accept, as petitioner urges, a blanket prohibition against consideration of subjective bad faith is not only unwarranted, it invites abuse of the judicial system.

This is not to say that Courts applying subpart 130-1 are bound to find actual bad faith before awarding attorney's fees. An objective standard can be a potent tool of the Courts. Using an objective standard in assessing conduct under 22 NYCRR Part 130 likewise can facilitate its use in holding parties and their attorneys to some minimum accountability for their acts that a purely subjective standard might allow escape from. Using an objective standard a Court may also be able to infer that an objectively unjustified claim is brought for an improper purpose [Hudson v. Moore Business Forms, Inc., 836 F.2d 1156, 1162-1163 (9th Cir.1987); Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 772, n. 8 (9th Cir.1986) ].

The Court rejects the argument that the right of access is infringed upon merely because an award of attorney's fees and expenses may chill its exercise. Although the so-called American rule that "attorneys' fees and disbursements are incidents of litigation and the prevailing party may not collect them ... is based upon the high priority accorded free access to the courts and a desire to avoid placing barriers in the way of those desiring judicial redress of wrongs" (A.G. Ship Maintenance Corporation v. Lezak, 69 N.Y.2d 1, 5, 511 N.Y.S.2d 216, 503 N.E.2d 681), the rule...