BILL NUMBER:  S345

 TITLE OF BILL :
An act to amend the civil practice law and rules, in relation to
expenses, penalties and additional interest for frivolous actions or
procedures and to repeal certain provisions of such law relating
thereto


 PURPOSE OR GENERAL IDEA OF BILL :
To establish clear statutory authority empowering the courts of the
State to impose monetary sanctions in any action or proceeding under
the civil practice law and rules as a deterrent to and penalty for
unmeritorious, bad faith litigation, as encouraged by the Court of
Appeals in its decision in   A.G. SHIP MAINTENANCE CORP. V.  LEZAK ,
69 N.Y. 2d 1,4 (1986).

 SUMMARY OF SPECIFIC PROVISIONS :
The bill would expand Section 8303-a of the civil practice law and
rules, which currently applies only to certain specified tort actions,
to authorize monetary sanctions in any civil action or proceeding
(subd. (a)).  However, the sanction provisions would not apply to
proceedings in small claims courts, landlord-tenant proceedings and
proceedings in the family court commenced under article three, seven,
eight or ten of the family court act.  Sanctions would be imposed only
upon a written finding of the court that a party or attorney had
              

brought a claim or employed procedures that were entirely without
merit and in bad faith (subd. (b)).  Available sanctions would include
legal expenses, including attorney's fees, incurred by an adversary as
a result of frivolous litigation (subd. (b) (3)); a court imposed
penalty of up to $250 (subd. (d)); and additional interest at 150
percent of the legal rate in cases where frivolous delaying tactics
had been interposed to avoid entry of a money judgment (subd. (e)).
 SEE ,  E.G. , Mass. Gen. Laws Ann., Ch. 231, Section 6F (West 1986).
Sanctions could be imposed against either the responsible party, the
party's lawyer, or both (subd. (c)).  The bill provides for several
significant procedural departures from the present section 8303-a.
The courts' discretionary power in the imposition of sanctions would
be reduced by the requirement of a hearing and written findings prior
to issuance of any order awarding sanctions (subd. (f), (h)).   SEE ,
 E.G. , Cal. Proc. Civ.  Code Section 128.5 (Deering 1987).  The court
would be required whenever possible before such hearing to give notice
on the record of its tentative view that sanctions may be called for;
if the party or attorney then promptly discontinued the action or
procedures at issue, no sanctions could be imposed (subd. (g)).  No
prior notice would be required, however, before an award of sanctions
would be authorized for the submission to the court of any false sworn
statement ( ID .ct.).  ANY ORDER GRANTING SANCTIONS WOULD BE
APPEALABLE TO THE APPROPRIATE APPELLATE COURT, WHICH WOULD HAVE THE
POWER TO DE NOVO REVIEW (SUBD.  (I)). THE BILL PROHIBITS THE
IMPOSITION OF ANY SANCTION FOR THE ASSERTION OF A NOVEL OR UNUSUAL
PRINCIPLE OF LAW EVEN IF DEEMED BY THE COURT TO BE ENTIRELY WITHOUT
MERIT (SUBD. (J)). SEE, E.G., Mass. Gen. Laws Ann., Ch. 231, Section
6F.  If enacted, this bill will provide the exclusive remedy for
frivolous action or procedure.

 EFFECTS OF PRESENT LAW WHICH THIS BILL WOULD ALTER :
Section 8303-a of the Civil Practice Law and Rules is repealed and a
new section 8303-a is added.

 JUSTIFICATION :
In its recent  A.G. SHIP MAINTENANCE  decision, the Court of Appeals
urged the formulation of a "plenary rule" authorizing sanctions for
bad faith civil litigation.  According to the court, "frivolous court
proceedings present a growing problem which must be deterred."  Due to
several developments in the court system since 1983, a well-designed
rule authorizing financial sanctions is necessary. Over the past five
years, the number of civil cases filed in the state courts has
increased dramatically.  Congestion in the Second Department, for
example, has reached the point that appeals are frequently heard four
to six months after the term for which they are officially calendared.
From a practitioner's perspective, the courts' concerns about
congestion are well-founded.  Every practitioner can cite his/her
frustration over false statements in adversaries' affidavits,
misconduct in the representation of witnesses at depositions, baseless
summary judgment motions, the assertion of meritless claims or
defenses to induce settlements and similar misconduct to cause delay
or for other improper purposes.  In the past, the courts have issued
sanction decisions without the explicit mandate of any statute or
court rule based on the theory of "inherent powers" to regulate and
control the conduct of litigants and counsel. However, the Court of
Appeals in  A.G. SHIP MAINTENANCE  held that the absence of either a
statute or a court rule authorizing sanctions precluded the imposition
of a penalty for frivolous actions.  The court did suggest that the
judiciary may have the power through its rule-making procedures to
create guidelines to permit the imposition of sanctions. Therefore,
the office of Court Administration recently promulgated rules which
authorize the imposition of sanctions for frivolous conduct in civil
litigation.  However, these rules are particularly troublesome given
the breadth of unreviewable judicial discretion.  The bill is a
general deterrent to willful misconduct and gross negligence. The
legislation provides a clear standard for defining sanctionable
misconduct while meeting the minimum requirements of due process.
While differences exist between the OCA rules and the bill in terms of
the penalty ceiling ($10,000) and the available sanctions, procedural
safeguards (e.g. preliminary notice and the prompt discontinuation of
conduct resulting in no imposition of the sanctions) are conspicuously
missing from the OCA rules. Since financial sanctions can be a
substantial hardship on the person penalized, the legislation is
designed to minimize the likelihood of arbitrary or erroneous
determination.  Under the legislation, the courts would be required to
give notice on the record of its tentative view that sanction may be
warranted.  The prompt discontinuance of the action or procedures at
issue would result in no imposition of the sanctions.  Furthermore,
unlike the OCA rules, any order granting sanctions would be subject to
review. The right to appeal has been traditional in New York's
judicial process.  The order is reviewable  DE NOVO  as a matter of
right, without deference to the lower court's discretion. Finally, the
bill states explicitly that no sanction will be imposed on the ground
that the party has advanced a novel or unusual argument. The common
law courts of New York have historically served as a crucible in which
new legal theories have been tested and from which important
developments in the law have emerged.  The legislation would repeal
the current section 8303-a of the CPLR which was enacted in 1985. This
section is limited to cases involving personal injury, medical
malpractice and similar tort claims. The bill will expand that section
to apply to all civil actions or proceedings, excluding proceedings in
small claims court, landlord-tenant and in family court commenced
under article three, seven, eight or ten of the family court act, as
well as implement procedural or due process reforms (e.g. a hearing
prior to a determination) that are lacking in the current statute.

 FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENT :
The state may realize some additional revenue.

 EFFECTIVE DATE :
Immediately, and shall apply to any action or proceeding commenced on
or after the effective date of this act.