Gouiran Holdings, Inc. v. Miller
| Decision Date | 18 May 1988 |
| Court | New York Supreme Court |
| Parties | In the Matter of the Application of GOUIRAN HOLDINGS, INC., Petitioner, For a Judgment pursuant to Article 78 of the Civil Practice Law and Rules, v. Terrence MILLER, Hearing Officer for the New York State Banking Department, and Jill Considine, Superintendent of the New York State Banking Department, Respondents. |
Bruce Cutler by Lionel R. Saporta, New York City, for petitioner.
Robert Abrams, Atty. Gen. by Dennis J. Saffran, Asst. Atty. Gen., for respondents.
This case presents the novel issue of whether prohibition is available to bar an administrative agency from considering, at a license revocation hearing, documentary evidence, claimed to have been derived from an illegal search and seizure, without affording the licensee an opportunity to test the validity of the search and seizure before the appropriate forum. Since the administrative hearing officer is without jurisdiction to decide the search and seizure issue, and since the exclusionary rule is applicable to administrative proceedings, prohibition lies if the licensee makes a sufficient showing of merit on its suppression motion. Thus, the application to dismiss the petition is denied and respondents are directed to serve an answer.
Respondents, the hearing officer for the New York State Banking Department and the Superintendent of the New York State Banking Department, allege that in 1987 a confidential investigation was started by the Richmond County District Attorney's Office centered on Emile Gouiran's unauthorized practice of law and issuance of false financial statements. Gouiran, an attorney admitted solely to the New Jersey Bar, maintained a law office on the second floor of the Gouiran Building, a three story building located at 386 Forest Avenue, Staten Island. The ground floor was occupied by a mortgage company, GHI, "The Mortgage Money People." The sole shareholder of GHI is Mr. Gouiran's mother, Dr. Dema Gouiran. Also located on the first floor of the Gouiran Building is the private office of a chiropractor. (See Petition, Exh B, pp. 8-9)
Respondents further allege that during the investigation it appeared that there were violations of the Banking Law and the General Business Law. Accordingly, the D.A.'s office alerted the Banking Department, and the Real Estate Financing and Securities Bureaus of the Attorney General's Office. In order to confirm the existence of the violations and also because of a concern that a "substantial likelihood of alteration and/or removal of documents" (Cross motion, p. 3) existed, the DA's office obtained and executed three search warrants to obtain these documents on February 4, 1988. One warrant was directed to the premises of GHI, another was directed to the person of Emile Gouiran, and the third was directed to the premises of Castle Abstract, Inc., located on the second floor of 392 Forest Avenue, and also to the basement storage area for Castle and GHI. All three warrants indicate that the property to be seized is that which tends to show that Emile Gouiran participated in the unlawful practice of law and issued a false financial statement. Petition, Exhs G, H, I. Petitioner alleges that, despite the narrow scope of the warrants, "nearly every business record" of GHI, Castle and the law office was seized (Reply, p 16).
On the same day, the Banking Department served upon GHI an order suspending GHI's mortgage banking license for thirty days, pursuant to Banking Law § 595(2), 1 on the grounds that Emile Gouiran has been "heavily involved" in the operation of GHI which was licensed on the On March 8, 1988, the Banking Department served GHI with a Notice of Hearing and Statement of Charges and scheduled a license revocation hearing for March 30, 1988. The hearing commenced in the afternoon of March 30, 1988. At that time GHI moved for a stay of the proceeding before the hearing officer on the grounds that the Notice of Charges was inadequate in certain respects, and that items sought to be introduced by the Banking Department were the product of an illegal search and seizure. With respect to this latter claim, GHI stated that, since the warrants authorized the search for evidence of only two misdemeanors, namely, Emile Gouiran's unlawful practice of law and his filing of false financial statements, the seizure of nearly every business record and document from GHI's premises, almost none of which, it is claimed, had anything to do with the two alleged misdemeanors, was overbroad and, therefore, unlawful. Petition, Exh. 1, pp. 2-4. In addition, it is claimed that the prospective testimony of witnesses who were listed in the Banking Department's response to GHI's discovery request, will be derived in large part from the illegally seized records. GHI urged that, since the exclusionary rule applies to administrative proceedings and, since the adminstrative agency lacks jurisdiction to pass on the legality of the search ( Matter of Finn's Liquor Shop v. State Liquor Authority, 24 N.Y.2d 647, 301 N.Y.S.2d 584, 249 N.E.2d 440, cert den. 396 U.S. 840, 90 S.Ct. 103, 24 L.Ed.2d 91), the proceeding must be stayed to permit the Supreme Court to consider GHI's suppression application. Id. at pp. 7-11. The hearing officer denied the stay while agreeing, however, that he had no authority to determine the suppression issue (See: Finn's, supra at 660, 301 N.Y.S.2d 584, 249 N.E.2d 440) and thereby indicated, in effect, that he was going to proceed with the hearing as though the exclusionary rule did not apply. GHI then filed the instant proceeding.
condition that he not be involved in any manner in such operation and that "Emile Gouiran, operating through GHI has been and is engaging in activities which are illegal under the Banking Law." Petition, Exh A
GHI's instant application seeks to bar the respondents, the Hearing Examiner and the Superintendent of the Banking Department, from proceeding with all administrative proceedings by the Banking Department including the license revocation hearing, until this court can render a decision on the merits of GHI's application for suppression of evidence derived from the allegedly illegal search and seizure. Respondents did not serve an answer but instead cross moved to dismiss (CPLR § 7804(f)), raising several threshold issues. They urge that this application cannot be made before this court but rather must be made in Richmond County. Citing CPL § 710.50(1)(a), they argue that a suppression motion must be made in the Supreme Court of the county in which an indictment is pending, "or if the defendant has been held by a local criminal court for the action of a grand jury ... in the superior court ... which impaneled or will impanel such grand jury."
CPL § 710.50 is inapplicable. It is clear that it refers to a suppression motion made in the context of a criminal action. See: CPL 710.40(1) [] Further, this is not a case in which "the defendant has been held by a local criminal court for the action of the grand jury," nor is an indictment pending. CPL § 710.50(1)(a). While it is true that a grand jury has been empaneled in this matter, it is undisclosed who the targets are (See: Letter of ADA Smillie-Scavelli of April 5, 1988), and uncertain whether any indictments will be handed down. 2
One threshold issue remains. During oral argument of this application, which was characterized as an application for a preliminary injunction, on April 8, 1988, I expressed a concern with the adequacy of petitioner's papers in that the assertion of the overbreadth of the execution of the warrants appeared conclusory and also because GHI seemed to be seeking suppression of documents seized from Castle and Emile Gouiran, thereby casting doubt on its standing to suppress. Because petitioner then assured the court that, if given the opportunity, it could make an adequate showing of merit the court adjourned the matter to allow petitioner to supplement its papers.
Respondents, after receiving petitioner's supplemental memorandum of law, declined to address the merits of the application. Instead, they contended that, since the ultimate relief sought is a review of the hearing examiner's evidentiary ruling, what petitioner was actually seeking was a writ of prohibition restraining the hearing examiner from "proceeding ... without or in excess of jurisdiction." (CPLR 7803(2)); See generally: Schachter v. Tomaselli, 105 A.D.2d 779, 481 N.Y.S.2d 725 (2d Dept. 1984). Respondents further asserted that, since the facts of this case do not warrant a departure from the doctrine of exhaustion of administrative remedies, prohibition does not lie and the application must be dismissed. Respondents reserved the right to serve an answer addressing the merits of petitioner's claims should this court reject respondents' assertion regarding the availability of prohibition. See: CPLR § 7804(f).
Thus, the sole remaining issue at this point in the proceedings is whether prohibition can properly be brought as an exception to the doctrine of exhaustion of administrative remedies, to allow petitioner to obtain interlocutory review of the hearing officer's determination to permit the introduction of evidence without regard to whether or not it is tainted. This court holds that if, following receipt of respondents' answer, it is determined that petitioner has made a sufficient showing entitling it to a suppression hearing (See: Footnote 2, supra ), prohibition lies.
To continue reading
Request your trial