Gordon v. Marrone

• Decision Date: 12 September 1994
• Citation: 202 A.D.2d 104,616 N.Y.S.2d 98
• Parties: In the Matter of Allan S. GORDON, Appellant, v. Anna Maria MARRONE, etc., et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 98

616 N.Y.S.2d 98

202 A.D.2d 104

In the Matter of Allan S. GORDON, Appellant, v. Anna Maria MARRONE, etc., et al., Respondents.

Supreme Court, Appellate Division,

Second Department.

Sept. 12, 1994.

Fulbright & Jaworski, New York City (James Nespole and Donald J. Lough, of counsel), for appellant.

Sive, Paget & Riesel, P.C., New York City (Mark A. Chertok and Clifford L. Davis, of counsel), for respondent The Nature Conservancy.

Chadbourne & Parke, New York City (Toni C. Hamburg, Caroline L. Orlando, Barry H. Garfinkel, and William M. Bradner, Jr., of counsel), for Scenic Hudson, Inc., The Natural Resources Defense Council, Inc., and The Sierra Club, amici curiae.

G. Oliver Koppell, Atty. Gen., New York City (Nancy Stearns, of counsel), for State of NY, amicus curiae.

Before THOMPSON, J.P., and ROSENBLATT, RITTER and SANTUCCI, JJ.

RITTER, Justice.

Litigants who use our court system for improper purposes, such as for retribution and harassment, may be sanctioned under the rules designed to deter frivolous conduct. The Supreme Court dismissed the proceeding here, on the merits, although it determined that the petitioner had raised a "colorable" claim. The court imposed a sanction against the petitioner, finding that the litigation had been brought primarily for improper purposes. The issue on appeal, one of first impression, is whether the prosecution of a colorable claim for primarily improper purposes constitutes frivolous conduct sanctionable under the court's rules. We hold that the imposition of a sanction by the court here was proper.

I

The petitioner owns more than 160 contiguous acres of property in the Town of North Castle. He resided in North Castle from 1975 through 1987, before moving to nearby Greenwich, Connecticut. He also owns substantial undeveloped tracts of land in the nearby area; one 36-acre parcel, known as "Thornbrook", is situated in the Town of Bedford.

The Nature Conservancy (hereinafter The Conservancy) owns a 569-acre parcel located in part, in the Towns of North Castle and Bedford, near the petitioner's Thornbrook property. The Conservancy, a not-for-profit corporation, operates a nature preserve on its property. It also owns a separate 3.8-acre parcel across the roadway opposite the entrance to its nature preserve, and adjoining the Thornbrook property. A 3,000-square-foot structure known as the "Gibb House" is situated on The Conservancy's smaller parcel and is used in part as the year-round administrative headquarters for the operation of its nature preserve.

In 1979 an application was made to the North Castle Tax Assessor for an exemption from payment of real property taxes for the Gibb House parcel. The application was granted pursuant to RPTL 420-a. An application to continue its tax exempt status was made and granted in each successive year after 1979.

In or about March 1985 the petitioner applied to the Town of Bedford Planning Board (hereinafter the Planning Board) for approval to subdivide his Thornbrook parcel. Because of the site's proximity to the environmentally sensitive Mianus River Gorge, the Planning Board determined that full-scale environmental review was required under the State Environmental Quality Review Act (hereinafter SEQRA, ECL 8-0101, et seq.). The SEQRA process was prolonged and obviously costly for the petitioner. The Conservancy actively participated in the process and strongly opposed the petitioner's proposed development of his property. Indeed, The Conservancy hired a consultant and submitted a proposed alternative plan to the Planning Board with respect to the development of the Thornwood subdivision. Ultimately, the Planning Board adopted The Conservancy's alternative proposal.

In or about October 1989 and again in or about September 1990, the petitioner commenced CPLR article 78 proceedings to challenge the Planning Board's actions, and to compel acceptance of his proposed development plan for the Thornbrook subdivision. The Conservancy was granted leave to intervene in the proceedings and submitted detailed papers in support of the Planning Board's actions. The instant litigation, another CPLR article 78 proceeding, was commenced during the pendency of the petitioner's second proceeding against the Planning Board.

The purported reason for bringing the instant proceeding was to challenge the tax exempt status of The Conservancy's Gibb House parcel. Both the Tax Assessor and The Conservancy defended the challenge on the merits and moved for dismissal. The Conservancy alleged further that the proceeding had been commenced solely in retaliation for its involvement in the Thornbrook subdivision SEQRA process and to deplete its economic resources. It requested an award of costs and the expenses of defending the litigation.

By decision dated March 27, 1991, the Supreme Court dismissed the petitioner's CPLR article 78 proceeding. The court held that the petitioner had no standing to challenge The Conservancy's tax exempt status and rejected the substance of the petitioner's claim that The Conservancy's tax exempt status was invalid. The court further concluded that the petitioner had no legitimate motive in challenging the Tax Assessor's determination other than retaliation against The Conservancy for its opposition to his proposed Thornbrook subdivision. Holding that the petitioner's actions were "frivolous conduct" (Matter of Gordon v. Marrone, 151 Misc.2d 164, 169-170, 573 N.Y.S.2d 105), the court reserved decision on the application for an award of costs to give the petitioner an opportunity to be heard.

The Conservancy's attorneys submitted affidavits in support of its application for an award of attorney's fees and costs. The petitioner's attorneys submitted opposition to The Conservancy's application and moved for leave to reargue on the question of whether sanctions should be imposed. The petitioner contended that the court had made factual and legal errors in arriving at the conclusion that the litigation had been commenced primarily to harass or retaliate against The Conservancy.

The Supreme Court granted reargument and concluded that the petitioner's assertion of standing and his challenge to the Gibb House tax exemption were "colorable." However, the court adhered to its determination that the litigation had been instituted primarily for improper purposes and ordered the petitioner to pay $10,000 to The Conservancy as and for its reasonable attorney's fees (see, Matter of Gordon v. Marrone, 155 Misc.2d 726, 590 N.Y.S.2d 649). ^*

II

Monetary sanctions for vexatious and frivolous litigation practice became a topic of controversy in the mid 1980's (see, Siegel, N.Y.Prac. § 414A, at 630 [2d ed.]. In 1985, this court issued two opinions holding that the courts have inherent power to impose sanctions as a means of curbing abusive and frivolous litigation (see, Ltown Ltd. Partnership v. Sire Plan, 108 A.D.2d 435, 489 N.Y.S.2d 567, mod. 69 N.Y.2d 670, 511 N.Y.S.2d 840, 503 N.E.2d 1377; Gabrelian v. Gabrelian, 108 A.D.2d 445, 489 N.Y.S.2d 914). Frivolous claims and abusive litigation practices were causing unjustifiable burdens on an already overcrowded court system. Inordinate delays in the resolution of genuine disputes and increases in the expense of lawsuits for both litigants and the courts were the result. The need for sanction power had become obvious.

In Ltown, Ltd., we addressed standards for the imposition of sanctions in cases involving frivolous appeals. The experience of courts in other states, most notably California, helped shape what this court viewed as an appropriate definition of "frivolous". The following language from a decision of California's highest court was cited as a useful guidepost: " '[A]n appeal should be held to be frivolous only when it is prosecuted for an improper motive--to harass the respondent or delay the effect of an adverse judgment--or when it indisputably has no merit--when any reasonable attorney would agree that the appeal is totally and completely without merit' " (Ltown, Ltd. v. Sire Plan, supra, 108 A.D.2d at 442, 489 N.Y.S.2d 567, quoting, In re Marriage of Flaherty, 31 Cal.3d 637, 650, 183 Cal.Rptr. 508, 646 P.2d 179, 187).

Also, in 1985, the Legislature concluded that frivolous litigation was a contributing cause of a liability insurance crisis. CPLR 8303-a, permitting the imposition of monetary sanctions in certain tort actions, was enacted as part of a legislative package intended to reduce frivolous claims and alleviate the crisis. The statute provides alternative grounds for a finding of frivolousness both of which require "bad faith". Subdivision [c] requires a finding of one or more of the following:

"(i) the action, claim, counterclaim, defense or cross claim was commenced, used or continued in bad faith, solely to delay or prolong the resolution of the litigation or to harass or maliciously injure another;

(ii) the action, claim,...