Senate Bill S6648

                                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 [1976]), 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.