TO BE ARGUED BY: OWEN DEMUTH ESTIMATED TIME: 10 MINUTES A.D. NO. 513039; ALBANY CO. INDEX NO. 5847-10 Court of Appeals of the State of New York NEW YORK STATE OFFICE OF VICTIM SERVICES, ON BEHALF OF LAURA BALOGH AND STEPHEN CAPITUMMINO, AND ALL OTHER VICTIMS OF RESPONDENT’S CRIMES, Petitioner-Respondent, -AGAINST- STEVEN C. RAUCCI, INMATE #10-A-2914, Respondent-Appellant. SHELLEY RAUCCI, Non-Party-Respondent-Appellant. PETITIONER-RESPONDENT’S BRIEF BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General OWEN DEMUTH Assistant Solicitor General of Counsel ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Petitioner-Respondent The Capitol Albany, New York 12224 Telephone: (518) 486-4087 Facsimile: (518) 473-8963 Dated: December 5, 2012 Reproduced on Recycled Paper
Transcript
TO BE ARGUED BY: OWEN DEMUTH ESTIMATED TIME: 10 MINUTES
A.D. NO. 513039; ALBANY CO. INDEX NO. 5847-10
Court of Appeals
of the State of New York NEW YORK STATE OFFICE OF VICTIM SERVICES, ON BEHALF OF LAURA BALOGH AND STEPHEN CAPITUMMINO, AND ALL OTHER VICTIMS OF RESPONDENT’S CRIMES,
Petitioner-Respondent,
-AGAINST- STEVEN C. RAUCCI, INMATE #10-A-2914,
Respondent-Appellant. SHELLEY RAUCCI,
Non-Party-Respondent-Appellant.
PETITIONER-RESPONDENT’S BRIEF
BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General OWEN DEMUTH Assistant Solicitor General of Counsel
ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Petitioner-Respondent The Capitol Albany, New York 12224 Telephone: (518) 486-4087 Facsimile: (518) 473-8963 Dated: December 5, 2012
Reproduced on Recycled Paper
i
TABLE OF CONTENTS PAGE
TABLE OF AUTHORITIES ......................................................................................... iii PRELIMINARY STATEMENT..................................................................................... 1 QUESTIONS PRESENTED.......................................................................................... 4 STATUTORY BACKGROUND ..................................................................................... 5 STATEMENT OF FACTS ........................................................................................... 10 ARGUMENT POINT I THE SON OF SAM LAW AS AMENDED MAKES A CONVICTED CRIMINAL’S STATE PENSION PROCEEDS AVAILABLE TO SATISFY A JUDGMENT IN A CRIME VICTIM’S ACTION FOR DAMAGES ..................................... 15 A. The Broad Language Of § 632-a Applies To “All Funds And Property,” Which On Its Face Includes Pension Proceeds .......... 16 B. The Relevant Canons Of Statutory Interpretation Support The Conclusion That § 632-a Trumps R.S.S.L. § 110 And C.P.L.R. 5205(c) And (d)............................................................................... 18 C. The Legislative History Establishes That “All Funds And Property” Means Just That .................................................. 21 D. This Court’s Dicta In Board Of Education Of City Of N.Y. v. Treyball Do Not Control This Case........................................... 23 E. The Third Department’s Holding Properly Recognized The Special Creditor Status Of Raucci’s Victims And Properly Effectuated Their Superior Right To The Proceeds Of His Pension........................................................................................... 25 F. The 2001 Pension Forfeiture Law And The Office’s Prior Actions Do Not Support The Rauccis Here ................................... 28 G. Preliminary Injunctive Relief Was Proper .................................... 30
ii
TABLE OF CONTENTS (cont’d)
PAGE ARGUMENT (cont’d) POINT II - THE RAUCCIS’ CONSTITUTIONAL CHALLENGES LACK MERIT AND THEIR CHALLENGE TO THE PENALTY PROVISION IS UNPRESERVED ........................................................ 33 A. Subjecting The Pension Proceeds To The Son Of Sam Law Does Not Violate Article V, § 7 Of The State Constitution........... 33 B. The Rauccis’ Constitutional Argument Regarding Executive Law § 632-A(7)(b)(iv) Is Unpreserved, Unripe And Without Merit ............................................................................................... 35 CONCLUSION............................................................................................................. 37 ADDENDUM ...............................................................................................................A1
iii
TABLE OF AUTHORITIES CASES PAGE Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860 (1990)......................................................................................... 32 Alweis v. Evans, 69 N.Y.2d 199 (1987)......................................................................................... 20 Bingham v. New York City Trans. Auth., 99 N.Y.2d 355 (2003)......................................................................................... 35 Board of Education of City of N.Y. v. Treyball, 63 N.Y.2d 980 (1984)..................................................................................passim Bryant v. New York City Health & Hosp. Corp., 93 N.Y.2d 592 (1999)......................................................................................... 19 Church of St. Paul & St. Andrew v. Barwick, 67 N.Y.2d 510 (1986)......................................................................................... 36 Ciafone v. Kenyatta, 27 A.D.3d 143 (2d Dep’t 2005) ............................................................................ 6 Cole, Matter of, 202 B.R. 356 (Bankr. Ct. S.D.N.Y. 1996) ......................................................... 27 D’Arata v. New York Cent. Mut. Fire Ins. Co., 76 N.Y.2d 659 (1990)......................................................................................... 32 Dutchess County Dep’t of Soc. Servs., Matter of v. Day, 96 N.Y.2d 149 (2001).................................................................................... 13,19 Enright v. Eli Lilly & Co., 77 N.Y.2d 377 (1991)......................................................................................... 17 Gold ex rel. Gold v. United Health Servs. Hosps., Inc., 261 A.D.2d 67 (3d Dep’t 1999), mod., 95 N.Y.2d 683 (2001) ........................... 24 Hallsville Capital v. Dobrish, 87 A.D.3d 933 (1st Dep’t 2011) ......................................................................... 27
iv
Table of Authorities (cont’d) CASES PAGE Hyde, Matter of, 15 N.Y.3d 179 (2010)......................................................................................... 21 Jensen v. General Elec. Co., 82 N.Y.2d 77 (1993)........................................................................................... 17 Knight-Ridder Broadcasting, Matter of v. Greenberg, 70 N.Y.2d 151 (1987)......................................................................................... 22 Local Govt. Assistance Corp. v. Sales Tax Asset Receivable Corp., 2 N.Y.3d 524 (2004)........................................................................................... 20 Majauskas v. Majauskas, 61 N.Y.2d 481 (1984)............................................................................... 25,27,34 McDermott v. McDermott, 119 A.D.2d 370 (2d Dep’t 1986), appeal dismissed, 69 N.Y.2d 1028 (1987)............................................................................. 26,27,34 McDonald v. McDonald, 193 A.D.2d 590 (2d Dep’t 1993) ........................................................................ 32 Musso v. Ostashko, 468 F.3d 99 (2d Cir. 2006) ................................................................................ 27 New York State Crime Victims Board v. Harris, 68 A.D.3d 1269 (3d Dep’t 2009) .............................................................. 14,17,25 New York State Crime Victims Bd. v. Majid, 193 Misc. 2d 710 (Sup. Ct. N.Y. Co. 2002) ....................................................... 25 New York State Crime Victims Bd. ex rel. Hayes v. Sookoo, 77 A.D.3d 1227 (3d Dep’t 2010) ......................................................... 9,17n,22,30 New York State Crime Victims Bd. v. Wendell, 12 Misc. 3d 801 (Sup. Ct. Alb. Co. 2006) ................................................ 19-20,30 New York State Crime Victims Bd. v. Yoli, (Sup. Ct. Albany Co. Index No. 5910-10, Devine, J.).................................. 29-30
v
Table of Authorities (cont’d) CASES PAGE N.Y.S. Office of Victim Servs. v. Raucci, 97 A.D.3d 235 (3d Dep’t 2012) .............................................................. 12n,13,19 Pajak v. Pajak, 56 N.Y.2d 394 (1982)......................................................................................... 19 Schorr v. New York City Dept. of Housing Preservation and Dev., 10 N.Y.3d 776 (2008)......................................................................................... 30 64 B Venture v. American Realty Co., 194 A.D.2d 504 (1st Dep’t 1993) ....................................................................... 31 Town of Caroga v. Herms, 62 A.D.3d 1121 (3d Dep’t), lv. denied, 13 N.Y.3d 708 (2009)......................................................................................... 31 Vatore v. Commissioner of Consumer Affairs, 83 N.Y.2d 645 (1994)......................................................................................... 22 STATE CONSTITUTION N.Y. Const., art. V, § 7 ................................................................................................... 4,33,34 STATE STATUTES C.P.L.R. 5205 ............................................................................................................ 28,32 5205(c) ........................................................................................................passim 5205(c)(1) ......................................................................................................... 14n 5205(d) ........................................................................................................passim 5205(e) ............................................................................................................... 20 5205(k) ..................................................................................................... 9,17n,19 Correction Law § 116 ................................................................................................................... 8
Table of Authorities (cont’d) MISCELLANEOUS PAGE Governor’s Approval Memorandum, L. 2001, ch. 62, reprinted in 2001 McKinney’s Session Laws of NY ........................................................... 7,8,22-23 L. 2001, ch. 62, Senate Debate, June 21, 2001 (Statement of Senator Nozzolio) .................................................................................................... 7,28,36 McKinney’s Cons Law of N.Y., Book 1, Statutes § 213 .............................................. 19 Sen. Mem. in Support, L. 2001, ch. 62, reprinted in 2001 McKinney’s Session Laws of NY....................................................................................passim
PRELIMINARY STATEMENT
In 2001, the Legislature amended Executive Law § 632-a, the “Son of
Sam Law,” dramatically enhancing the ability of crime victims to recover
compensation from the convicted criminals who harmed them. See L. 2001,
ch. 62. As enacted in 1985, the statute extended the statute of limitations
period within which crime victims could bring actions against convicted
persons for damages, in order to enable victims to reach property or income
received by criminals as a result of the crime, sometimes long after the crime
occurred. The example that gave its name to the statute was the proceeds of
a book about the crime. Among other things, the 2001 amendment greatly
expanded the law’s reach to include other “funds of a convicted person,”
defined to include “all funds and property received from any source,” with
limited exceptions not relevant here. Executive Law § 632-a(1)(c) (emphasis
added). The statute’s plain meaning and its legislative history compellingly
demonstrate that the Legislature meant the Son of Sam Law to apply broadly
to all of the convicted person’s property regardless of its source, including the
proceeds of the public pension at issue here.
In 2010, Steven Raucci was convicted after a jury trial of, inter alia,
first degree arson and first degree criminal possession of a weapon following
incidents in which he used an explosive device to blow off the door of the
home of one victim and placed another explosive device at the home of a
2
second victim (Record on Appeal [“R.”] 223). He was sentenced to a term of
23 years to life in prison. Counsel for one of Raucci’s victims notified
petitioner-respondent Office of Victim Services (“the Office”)1 that Raucci was
entitled to receive a New York State retirement pension. Pursuant to the
Son of Sam Law, the Office then applied in Supreme Court for a preliminary
injunction precluding Raucci and his wife, nonparty appellant Shelley Raucci,
from disbursing or dissipating the pension proceeds pending a civil action to
be brought against Raucci under the Son of Sam Law by the victims of his
crimes.
Supreme Court, Albany County (McDonough, J.), denied the Office’s
application for a preliminary injunction. Supreme Court concluded that the
proceeds of the pension were exempted from the claims of Raucci’s victims by
Retirement and Social Security Law (“R.S.S.L.”) § 110, which provides that
retirement allowances “[s]hall not be subject to execution, garnishment,
attachment, or any other process whatsoever.” Supreme Court found that the
Office had not argued that the Son of Sam Law supersedes R.S.S.L. § 110,
and thus did not consider that question. The Appellate Division, Third
Department, reversed. That court first found that the question whether the
Son of Sam Law supersedes R.S.S.L. § 110 had been squarely presented to
1 The Office was formerly known as the Crime Victims’ Board.
3
Supreme Court and preserved. Turning to the merits, the court held that
Raucci’s pension proceeds were subject to the Son of Sam Law. The court
cited the statute’s broad definition of “funds of a convicted person,” the
legislative history, which explained that the 2001 amendment was intended
to ensure that convicted criminals were held accountable to their victims
“regardless of their source of wealth” (R. 266), and the lack of any exemption
for public employee pensions, although two other narrow exemptions were
provided. The court accordingly granted the Office’s application for a
preliminary injunction.
The Third Department’s opinion and order should be affirmed.
Contrary to the Rauccis’ arguments, the fact that the 2001 amendment does
not mention public pensions in general or R.S.S.L. § 110 in particular does
not preclude the application of the Son of Sam Law here. The Third
Department correctly held that the recent and more specific provisions of the
Son of Sam Law supersede the older and more general provisions of R.S.S.L.
§ 110. When it amended the Son of Sam Law in 2001, the Legislature
dramatically expanded the scope of the funds subject to the law, broadly
defining “funds of a convicted person” to include “all funds and property
received from any source,” with only narrow exemptions that do not apply
here. Executive Law § 632-a(1)(c) (emphasis added). The 2001 amendment
4
cannot be reconciled with the earlier provisions of R.S.S.L. § 110 and
accordingly must be deemed to supersede that section for purposes of
permitting crime victims to recover against the proceeds of a convicted
person’s public pension. Although the Third Department did not address the
Rauccis’ secondary argument that the pension is exempt as trust property
under C.P.L.R. 5205(c) and (d), its conclusion that the Son of Sam Law
supersedes R.S.S.L. § 110 is equally applicable to these provisions. Finally,
the Rauccis’ constitutional challenges to the Son of Sam Law are without
merit, and in particular, their claim that the penalty provision of Executive
Law § 632-a(7) is unconstitutional is unpreserved and unripe. Consequently,
this Court should affirm the Third Department’s opinion and order granting
the Office’s application for a preliminary injunction.
QUESTIONS PRESENTED
1. Whether the Son of Sam Law, as amended in 2001, permits the
Office to obtain a preliminary injunction to secure the proceeds of Raucci’s
public pension for the benefit of the claims of his crime victims,
notwithstanding the provisions of R.S.S.L. § 110 and C.P.L.R. 5205(c) and (d).
2. Assuming that the Son of Sam Law authorizes the preliminary
injunction, whether the statute conforms to the requirements of article V,
section 7 of the State Constitution, providing that pension benefits “shall not
5
be diminished or impaired,” because subjecting Raucci’s pension proceeds to
the claims of his victims does not diminish or impair the amount of the
pension.
3. Whether the Rauccis’ constitutional challenges to the penalty
provisions of Executive Law § 632-a(7)(b)(iv) are unpreserved for this Court’s
review and in any event unripe because the Office has not assessed any
penalty here.
STATUTORY BACKGROUND
Executive Law § 632-a, popularly known as the “Son of Sam Law,” is
designed to facilitate crime victims’ recovery of damages from convicted
persons who harmed them. Section 632-a affords crime victims and their
representatives an extended limitations period during which they may
commence civil lawsuits against convicted persons. Specifically, the law
provides that even after all other relevant statutes of limitations have
expired, crime victims and their representatives are granted an additional
three-year period to sue a convicted person for civil damages caused by the
crime. The limitations period runs from the date they discover that the
convicted person came into possession of “funds of a convicted person” or
obtained or generated “profits from a crime.” See Executive Law § 632-a(3).
6
Before its amendment in 2001, section 632-a applied only to “profits
from a crime,” meaning generally property or income generated from the
crime itself. See Executive Law former § 632-a(1)(b); Ciafone v. Kenyatta,
27 A.D.3d 143, 146 (2d Dep’t 2005). However, the Legislature determined
that “[c]riminals should be held accountable to their victims financially,
regardless of their source of wealth.” Sen. Mem. in Support, L. 2001, ch. 62
(“Senate Memo”), reprinted in 2001 McKinney’s Session Laws of NY 1305,
1312. Accordingly, in 2001, the Legislature expanded section 632-a to permit
victims to bring an action within three years of discovery of any “funds of a
convicted person,” a term that broadly includes “all funds and property
received from any source,” with two narrow exceptions. L. 2001, ch. 62, § 1;
Executive Law § 632-a(1)(c); Ciafone, 27 A.D.3d at 146.
The Legislature and the Governor both explained that the 2001
amendment’s sweeping definition of “funds of a convicted person” reflected
their intent that the definition would be all-encompassing. Thus, the Senate
Memo stated that “employment income earned by a convicted person, as well
as all other forms of earned and unearned income, are always recoverable by
a crime victim once the crime victim commences a cause of action” pursuant
to the Son of Sam Law or other applicable statute. Senate Memo, at 1306
(emphasis added). The memo explained that “[b]y expanding the law to cover
7
money and property that a convicted criminal receives from any source,” the
amendment “better ensures that crime victims are justly and fully
reimbursed for their losses and suffering.” Id. at 1312. And in signing the
2001 amendment, the Governor explained that “the sweeping changes
effected by the bill will help ensure that convicted criminals who have or gain
the ability to pay are held financially accountable to their victims regardless
of their source of wealth.” Governor’s Approval Memorandum, L. 2001, ch. 62
(“Governor’s Memo”), reprinted in 2001 McKinney’s Session Laws of New
York 1226, 1228-29.
In particular, the Senate debate establishes that the Legislature
contemplated that that where a spouse was the recipient or representative of
income from the convicted person, “those sources of revenue would in fact be
obtainable to the crime victim under this provision,” and that only in the
circumstance where amounts were payable to the spouse herself, such as a
death benefit or inheritance not payable to the convicted person would the
amounts “not be subject to [garnishment] under this statute” (A31-32).2 L.
2001, ch. 62, Senate Debate, June 21, 2001, at 10839-10840 (Statement of
Senator Nozzolio).
2 References preceded by “A” are to the Addenda attached to this brief.
8
Accordingly, payors of “funds of a convicted person” must notify the
Office as soon as practicable after discovering that the payment or intended
payment qualifies as such. See generally Executive Law § 632-a(2) and (7).
The notification provisions are triggered only if the value, combined value, or
aggregate value of the funds “exceeds or will exceed ten thousand dollars.”
Id. at § 632-a(2)(a). In particular, notice must be given where individual
payments of less than $10,000 exceed $10,000 in the aggregate. See
Governor’s Memo at 1227. Similarly, the Department of Corrections and
Community Supervision (“DOCCS”) must notify the Office when funds in an
inmate’s account exceed or will exceed $10,000. Executive Law § 632-a(2)(b);
see also Correction Law § 116. And the notice requirement of Executive Law
§ 632-a(2) applies to the Office of the Comptroller, who must notify the Office
30 days before it issues a check for payment to a DOCCS inmate “for any
reason.” State Finance Law § 8(12-g), L. 2001, ch. 62, § 4; see also Senate
Memo, at 1308 (amendment “applies to all payments that the State
Comptroller makes to an inmate or prisoner for any reason”).
Although the definition of “funds of a convicted person” excludes child
support and earned income, the Third Department previously explained that
the “distinction between earned and unearned income is relevant only to
determine whether [the Office] must be notified, and has no effect on the
9
ability of a crime victim or a victim’s representative to recover such income in
a civil action.” New York State Crime Victims Bd. ex rel. Hayes v. Sookoo,
77 A.D.3d 1227, 1227 (3d Dep’t 2010); see also Senate Memo at 1306
(convicted person’s employment income and all other forms of earned and
unearned income are always recoverable by the victim). Pursuant to section
632-a, only two sources of funds are exempted from “execution or
enforcement” of a judgment, and thus are not recoverable by a crime victim:
the first $1,000 in the convicted person’s inmate account and the first 10% of
compensatory damages obtained by the convicted person in a civil judgment.
See Executive Law § 632-a(3), cross-referencing C.P.L.R. 5205(k).
The Legislature has given the Office a key role in implementing the
statute. First, as noted above, any person or entity knowingly contracting to
pay a convicted person either profits from a crime in any amount, or any
funds exceeding ten thousand dollars, is required to give notice to the Office.
[632-a(2)(a) & (b)]. Second, upon receipt of notice that funds of a convicted
person exceed or will exceed $10,000, the Office must notify the victim or his
or her representative of the existence of the funds. Id. at § 632-a(2)(c). A
victim is required to notify the Office upon bringing suit under the statute to
recover those funds, and is permitted to notify the Office in advance of his or
her intent to bring such a suit. Id. at § 632-a(4). If the Office receives such
10
notice of intent, section 632-a authorizes the Office to seek the provisional
remedies of attachment, injunction, receivership, and notice of pendency to
preserve the funds on behalf of the crime victim. Id. at § 632-a(6).
STATEMENT OF FACTS
Steven C. Raucci is currently in DOCCS’s custody, serving a sentence of
23 years to life imprisonment for his 2010 conviction of first degree arson and
first degree criminal possession of a weapon (R. 233-240). Raucci used an
explosive device to blow off the door of the home of one victim and he placed
another explosive device at the home of a second victim (R. 223). Raucci has
a DOCCS-controlled inmate account at Clinton Correctional Facility, where
he is incarcerated (R. 21-22). The Office was notified by the attorney for one
of Raucci’s crime victims that Raucci, a former public employee, was entitled
to receive a retirement pension of approximately $5,800 per month from the
New York State and Local Employees’ Retirement System (the “System”)
(R. 22-23, 33, 35, 38, 221-222). The attorney asked the Office to assist in
freezing those assets pending a civil lawsuit brought by the crime victims
against Raucci (R. 21-22, 33). Two of Raucci’s crime victims provided the
Office with an affidavit indicating that they intended immediately to sue
Raucci for damages they had incurred in connection with his crimes against
them (R. 34-40).
11
In order to preserve the pension funds for use in satisfying any
judgment the victims might obtain, the Office commenced a proceeding, as
authorized by the Son of Sam Law, Executive Law § 632-a(5)(c), (6), seeking a
preliminary injunction that would prevent Raucci and his wife, Shelley
Raucci, from distributing the funds (R. 17-27).3 The Office asked Supreme
Court to effectuate this objective by issuing an order reciting that Raucci and
or his agents or assigns are “deemed to have directed” the System to mail
Raucci’s pension payments to his inmate account, and that they are
restrained and enjoined from “withdrawing, disbursing, transferring,
assigning or encumbering for any reason” the amounts deposited in Raucci’s
inmate account, excluding the first $1,000 in the account (R. 18-19, R. 25-26).
The Rauccis argued that the pension proceeds were exempt from the
Son of Sam Law under R.S.S.L. § 110 and C.P.L.R. 5205(c) (R. 41-47). The
Office responded first that R.S.S.L. § 110 protected the proceeds of pensions
only while in the System’s possession and control and not in the hands of the
pensioner (R. 48-61, R. 168-169), and second that in any event the broad
definition of “funds of convicted person” included “all funds and property from
3 Although Ms. Raucci was not named as a party to this proceeding, the Office identified Ms. Raucci as a prospective garnishee of Raucci. Ms. Raucci alleged that Raucci executed a power of attorney naming her as Raucci’s attorney in fact (R. 44-45). Before the Appellate Division granted the preliminary injunction, Ms. Raucci used this power of attorney to endorse and cash the pension checks the System sent to Raucci (R. 23).
12
any source,” save for four narrow categories of funds, not applicable here.
(R. 166).
Supreme Court denied the Office’s application for a preliminary
injunction. The court found that the pension proceeds were a “retirement
allowance” that R.S.S.L. § 110 exempted from execution, garnishment,
attachment or “any other process whatsoever”, even after they were paid to
Raucci (R. 12-14). The court relied for this conclusion on dicta in this Court’s
decision in Board of Education of City of N.Y. v. Treyball, 63 N.Y.2d 980, 982
(1984), which did not involve the Son of Sam Law. The court declined to
address the question whether Executive Law § 632-a, as amended in 2001,
superseded the older provisions of R.S.S.L. § 110, stating that the Office had
not raised the issue (R. 14).4 The court recognized the strong public policy
advanced by the Son of Sam Law, but it concluded that Raucci’s pension
proceeds were “clearly immunized” by R.S.S.L. § 110, and that “any remedy
for this apparently inequitable result can only emanate from the Legislature
of this State” (R. 14-15).
4 The Appellate Division, however, correctly found that the issue was properly preserved as a question of law for appellate review (R. 265), N.Y.S. Off. of Victim Services v. Raucci, 97 A.D.3d 235, 238 (3d Dep’t 2012), and the Rauccis have not challenged that finding here.
13
The Third Department reversed and entered a preliminary injunction
(R.263-269). 5 Matter of N.Y.S. Off. of Victim Servs. v. Raucci, 97 A.D.3d 235
(3d Dep’t 2012). The court held that the Treyball dicta did not govern this
case, because the Son of Sam Law, as amended in 2001, superseded R.S.S.L.
§ 110 as construed in Treyball. The court reasoned that the Son of Sam Law
applies broadly to all funds and property of the convicted person with two
narrow exemptions not including pensions (R. 266-267). The court concluded
from the legislative history of the 2001 amendments that “[a]part from those
exceptions,” the Son of Sam Law was purposefully written to “ensure that
convicted criminals are ‘held accountable to their victims financially,
regardless of their source of wealth’” (R. 266, quoting Senate Memo, 2001
McKinney’s Session Laws of NY at 1312).
Moreover, the court explained that the “older, more general provisions”
of § 110 “are subordinate to the more recent and specific dictates” of the Son
of Sam Law because “‘a prior general statute yields to a later specific or
special statute’” (R. 267, quoting Matter of Dutchess County Dep’t of Soc.
Servs. v. Day, 96 N.Y.2d 149, 153 [2001]). Finally, the court explained that
this Court and others have long recognized that statutes such as R.S.S.L.
5 The Rauccis subsequently argued that the Third Department’s order contemplated further proceedings (R. 272-277), but Supreme Court disagreed, recognizing that the Third Department had expressly entered an injunction. (R.278).
14
§ 110 must yield to support obligations and equitable distribution and that
similarly, a crime victim does not stand “in the same shoes as a potential
ordinary creditor” (R. 268, quoting Matter of New York State Crime Victims
Bd. v. Harris, 68 A.D.3d 1269, 1271 [3d Dep’t 2009]). The court observed that
the Rauccis’ interpretation would treat crime victims the same as ordinary
creditors regarding convicted criminals’ public pensions, a result that would
“directly thwart[ ] the Legislature’s stated intent of holding convicted
criminals financially accountable regardless of their source of wealth”
(R. 268). Accordingly, the court concluded that R.S.S.L. § 110 did not exempt
the pension proceeds from the later-enacted Son of Sam Law and granted the
preliminary injunction (R. 268).6
6 Although the court did not address the application of the exemption in C.P.L.R. 5205(c)(1) for “all property while held in trust for a judgment debtor,” the court’s reasoning that the Son of Sam Law supersedes R.S.S.L. § 110 applies equally to C.P.L.R. 5205(c)(1).
15
ARGUMENT
POINT I
THE SON OF SAM LAW AS AMENDED MAKES A CONVICTED CRIMINAL’S STATE PENSION PROCEEDS AVAILABLE TO SATISFY A JUDGMENT IN A CRIME VICTIM’S ACTION FOR DAMAGES The Third Department properly held that the Son of Sam Law
supersedes R.S.S.L. § 110, permits Raucci’s victims to satisfy any judgments
they obtain against Raucci out of the pension proceeds, and authorizes the
Office to obtain the preliminary relief to preserve those proceeds. The Third
Department’s conclusions are well supported by the language of Executive
Law § 632-a and the relevant canons of construction as well as by the
legislative history of the 2001 amendment, all of which establish that the Son
of Sam Law was meant to apply broadly to all funds and property of a
convicted person received from any source, other than the two narrow
exemptions specifically provided for in the Son of Sam Law itself. The
Rauccis’ main argument in this Court is that even without an express
exemption in § 632-a, R.S.S.L. § 110 or C.P.L.R. 5205(c) and (d) apply of their
own force to exempt state pension proceeds, but that argument cannot be
squared with the all encompassing language and purpose of the 2001
amendment to the Son of Sam Law to make victims whole from any and all
sources of the criminal’s funds and property.
16
The Third Department correctly found that this Court’s decision in
Treyball was not relevant to the issue in this case and further that crime
victims invoking the Son of Sam Law are not limited to the rights of ordinary
creditors. Further, there is no merit to the Rauccis’ argument that the Third
Department’s holding wrongly prefers crime victims’ Son of Sam Law claims
to the rights of the criminal’s spouse. Similarly without merit are the
Rauccis’ arguments based on the 2011 pension forfeiture law and what they
characterize as the Office’s prior position regarding pension proceeds.
Accordingly, the Third Department’s opinion and order should be affirmed.
A. The Broad Language Of § 632-a Applies To “All Funds And Property,” Which On Its Face Includes Pension Proceeds. In 2001 the Legislature expanded the reach of the Son of Sam Law to
cover not just “profits from a crime” but also all other “funds of a convicted
person.” Executive Law § 632-a(3). The term “funds of a convicted person” is
defined in relevant part to include “all funds and property received from any
source.” Executive Law § 632-a(1)(c) (emphasis added).7 This extraordinarily
7 The statutory exclusion of “child support and earned income” is not relevant here, and the Rauccis have never claimed that it is. First, pension proceeds are not “earned income” as that term is ordinarily used in statutes. Executive Law § 632-a(1)(f) defines “earned income” in relevant part as income “derived from one’s own labor” rather than “dividends or investments”; while pension proceeds have some characteristics of both, tax and benefit statutes consistently treat them as something different from earned income. See, e.g., 26 U.S.C. § 32(c)(2) (federal earned income tax credit); 42 U.S.C. § 1382a(a)(2)(B) (federal eligibility for
17
sweeping language is sufficient to establish that Executive Law § 632-a as
amended supersedes the general exemptions for pension proceeds provided in
R.S.S.L. § 110 and C.P.L.R. 5205(c) and (d). As the Third Department
observed in Harris, 68 A.D.3d at 1271, “the Legislature went to great lengths
to provide avenues to allow crime victims to be compensated for their losses.”
Because nothing in the Son of Sam Law’s broad language purports to carve
out an exemption from “funds of a convicted person” for pension proceeds,
“[t]he all-encompassing sweep of the ‘words chosen by the Legislature’ leave
no room for judicial insertion of qualification or exceptions by interpretation,
especially when the context and evolution of this historic legislation is
examined.” Jensen v. General Elec. Co., 82 N.Y.2d 77, 83 (1993) (quoting
Enright v. Eli Lilly & Co.,77 N.Y.2d 377, 385 n.1 [1991]). Moreover, when
supplemental social security benefits); New York Tax Law § 606(n)(2) (eligibility for state farm tax credit). Second, the earned income exclusion in § 632-a exempts earned income only from the statute’s notice requirement, thus sparing employers the burden of frequent reporting to the Office, but not from execution of a judgment. The only property of a convicted person that is “not subject to execution or enforcement” of a “judgment obtained pursuant to this section” is the first $1,000 deposited into an inmate’s account and 10% of a compensatory damages judgment obtained by the convicted person. Executive Law § 632-a(3) (cross-referencing C.P.L.R. 5205(k)); see also New York State Crime Victims’ Bd. ex rel. Hayes v. Sookoo, 77 A.D.3d, 1227, 1227-28 (3d Dep’t 2010). The legislative history of the 2001 amendment states unequivocally that all income, whether earned or unearned, is made available to satisfy a crime victim’s judgment, Senate Memo at 1306, and thus all income is subject to the Office’s injunctive authority on the victim’s behalf. See Executive Law § 632-a(6).
18
the Legislature amended § 632-a in 2001, it also imposed the notice
requirement of Executive Law § 632-a(2) on the Comptroller, who must
notify the Office 30 days before issuing a check for payment to a DOCCS
inmate “for any reason.” State Finance Law § 8(12-g), L. 2001, ch. 62, § 4; see
also Senate Memo, at 1308 (amendment “applies to all payments that the
State Comptroller makes to an inmate or prisoner for any reason”). Pension
payments are among the payments that the Comptroller makes to an inmate
“for any reason,” and the Legislature’s application of the notice requirement
to all Comptroller payments further supports the conclusion that § 632-a
permits crime victims to recover against all funds and property of a convicted
person without regard to the limitations of R.S.S.L. § 110 and C.P.L.R.
5205(c) and (d).
B. The Relevant Canons Of Statutory Interpretation Support The Conclusion That § 632-a Trumps R.S.S.L. § 110 And C.P.L.R. 5205(c) And (d). The conclusion that judgments under § 632-a are enforceable against
the proceeds of a public pension without regard to other statutory limitations
also follows from the relevant canons of statutory interpretation. The
Legislature did not list the exemptions in R.S.S.L. § 110 and C.P.L.R. 5205(c)
among the exemptions from section 632-a and thus, the Son of Sam Law
supports “a fair inference that the Legislature intended that no other
19
exceptions should be attached to the act by implication.” McKinney’s Cons
Law of N.Y., Book 1, Statutes § 213, Comment at 373; see also Pajak v. Pajak,
56 N.Y.2d 394, 397 (1982) (“[t]he failure of the Legislature to include a
matter within a particular statute is an indication that its exclusion was
intended”). The statutory scheme establishes that “where the Legislature
intended to exclude a specific type of [property], thereby exempting them
from [the reach of the Son of Sam Law], it did so explicitly.” Bryant v. New
York City Health & Hosp. Corp., 93 N.Y.2d 592, 608 (1999). Unlike the
exemptions specified in the Son of Sam Law and C.P.L.R. 5205(k), there is no
explicit reference to R.S.S.L. § 110 or C.P.L.R. 5205(c) or (d). Thus, the Third
Department properly held that “the absence of any exception in the statute
for public employee pensions evinces the Legislature’s intent to supersede the
bar in Retirement and Social Security Law § 110” (R. 267). Raucci, 97 A.D.3d
at 239.
In addition, the older, more general provisions of R.S.S.L. § 110 --
which has been in existence in some form or other since 1920 -- and C.P.L.R.
5205(c) and (d), are subordinate to the more recent and specific dictates of
Executive Law § 632-a because “a prior general statute yields to a later
specific or special statute.” Matter of Dutchess County Dep’t of Soc. Servs. v.
Day, 96 N.Y.2d at 153 (citation omitted); see also New York State Crime
20
Victims Bd. v. Wendell, 12 Misc. 3d 801, 806 (Sup. Ct. Alb. Co. 2006) (holding
that the general exemption contained in [C.P.L.R. 5205(e)] “must yield” to the
specific mandate of Executive Law § 632-a requiring that a crime victim be
permitted to recover from any source of money and property belonging to a
convicted person). Thus, it makes no difference that the Legislature did not
specifically refer to pensions (Br. at 15, 27), amend R.S.S.L. § 110 or C.P.L.R.
5205(c) or (d), or include in the Son of Sam Law “a broad, general clause” that
the Son of Sam Law supersedes all other statutes (Br. at 28-29).
Although this Court has stated that “implied repeal or modification of a
preexisting law” is disfavored, this is a case where “‘the two are in such
conflict that it is impossible to give some effect to both,’” at least so far as the
public pension proceeds at issue here are concerned. See Local Govt.
(quoting Alweis v. Evans, 69 N.Y.2d 199, 204 [1987]). In Alweis, this Court
emphasized that “[l]egislative intent is of course paramount in determining
whether there has been implied repeal of a statute.” Alweis, 69 N.Y.2d at
205. In this case, the legislative intent to permit crime victims to recover
against all funds and property of a convicted person with two narrow
exceptions not applicable here could not be clearer, and accordingly the
21
conflict between the Son of Sam Law and R.S.S.L. § 110 and C.P.L.R. 5205(c)
and (d) can be reconciled only by finding that the Son of Sam Law controls.
C. The Legislative History Establishes That “All Funds And Property” Means Just That. The legislative history of the 2001 Son of Sam Law amendments
further emphasizes the broad scope of the amended law, and thus supports
the Third Department’s conclusion that the failure to exempt pensions or
trust funds from the Son of Sam Law was no oversight. There is no
indication in the legislative history that public pension proceeds were to be
exempted from the broad statutory mandate. On the contrary, the legislative
history is replete with statements that when the Legislature defined “funds
of a convicted person” to include “all funds and property,” it meant the
definition to be all inclusive.
Where, as here, the statutory language in the Son of Sam Law is
unambiguous, legislative history may be dispositive when it “reveals nothing
that would counsel an alternative interpretation.” Matter of Hyde, 15 N.Y.3d
179, 185 (2010). The Senate Memo states that the 2001 amendments would
enable crime victims “to recover money and property received by or on behalf
of a convicted person from virtually any source” and that the amendments
applied to “all funds and property that a convicted person receives from any
22
source or that are received on such person’s behalf.” Senate Mem.,
McKinney’s 2001 Session laws of NY 1305 (emphasis added). The Memo also
explains that “employment income earned by a convicted person, as well as
all other forms of earned and unearned income, are always recoverable by a
crime victim” who brings a Son of Sam Law action. Id. at 1306 (emphasis
added). The memo specifies the salutary purpose of the amendments: to
“ensure[ ] that crime victims are justly and fully reimbursed for their losses
and suffering,” because “[c]riminals should be held accountable to their
victims financially, regardless of their source of wealth.” Id. at 1312
(emphasis added). See Sookoo, 77 A.D.3d at 1227 (citing the Senate Memo as
authoritative in interpreting the 2001 amendments). This Court has held
that a sponsor’s memorandum submitted contemporaneously with the
legislation, while not determinative, “is entitled to considerable weight in
discerning legislative intent.” Vatore v. Commissioner of Consumer Affairs,
83 N.Y.2d 645, 651 (1994), quoting Matter of Knight-Ridder Broadcasting v.
Greenberg, 70 N.Y.2d 151, 158 (1987).
In addition, the Governor’s signing memorandum echoed the
Legislature’s statements, emphasizing the broad applicability of the statute
to all of the convicted person’s earned and unearned income. Governor’s
23
Memo, at 1228-29. Accordingly, the legislative history further supports the
Third Department’s decision to grant the injunction here.
D. This Court’s Dicta In Board Of Education Of City Of N.Y. v. Treyball Do Not Control This Case. This case turns on the proper interpretation of an amendment to the
Son of Sam law enacted in 2001. The answer cannot be controlled, as the
Rauccis’ suggest (Br. at 15-19), by this Court’s decision 17 years earlier in
Board of Education of City of N.Y. v. Treyball, 63 N.Y.2d 980 (1984). That
case did not purport to interpret the statute at issue here and, as the Third
Department correctly held, it sheds no light on the question before the Court.
In Treyball, this Court upheld the right of the City Board of Education
to attach pension contributions that had been mistakenly refunded to the
retiree and then allegedly transferred to his sons to protect them from being
subject to a judgment in favor of the Board. The Court held that under the
governing provision of the Board’s retirement system rules and regulations,
the retiree’s right to the return of the pension contributions was no longer
immunized “once returned to the retiree.” Id. at 982. And in dicta the Court
contrasted the treatment of returned contributions to the treatment of
“retirement allowances” under the Board’s regulations, which protect “not
only the ‘right’ to retirement allowances but also a ‘retirement allowance’
24
itself’.’” The Court suggested that the proceeds of a pension in the retiree’s
hands would be exempt from process. Id., citing R.S.S.L. § 110 (which also
refers to the “retirement allowance itself”).
Even if Treyball is read to support the claim that R.S.S.L. § 110
generally shields a retirement allowance from creditors after disbursement to
the retiree, it has no application here. Treyball “predated the 2001
amendments to the Son of Sam Law that are at issue here and is not relevant
to the interplay between those amendments” and R.S.S.L. § 110 (R. 265).
That interplay is “the precise question presented on this appeal” (R. 265).
Because Treyball does not address the question whether the Son of Sam Law,
as amended in 2001, permits a crime victim to recover against a criminal’s
public pension, the decision does not govern the outcome here. See Gold ex
rel. Gold v. United Health Servs. Hosps., Inc., 261 A.D.2d 67, 72 n. 5 (3d Dep’t
statute was not instructive because it did not address the interplay between
an older statute and the more recent ones before the court). Thus, in
resolving the issue in this case, the dicta in Treyball provide no guidance.
25
E. The Third Department’s Holding Properly Recognized The Special Creditor Status Of Raucci’s Victims And Properly Effectuated Their Superior Right To The Proceeds Of His Pension. The Third Department explained that “a crime victim does not stand in
the same shoes as a potential ordinary creditor” (R. 268, quoting Harris, 68
A.D.3d at 1271). See also New York State Crime Victims Bd. v. Majid, 193
Misc. 2d 710, 715 (Sup. Ct. N.Y. Co. 2002) (“the accounts of criminals which
are the subject of the Son of Sam statute are considered to be different from
the general assets of the ordinary defendant in a civil case”). That court
found that treating Raucci’s crime victims the same as any other creditor
regarding Raucci’s pension proceeds, as the Rauccis argue, would thwart the
Legislature’s clearly stated intent to hold convicted criminals like Raucci
financially accountable to their victims (R. 268).
The Third Department was correct. The Son of Sam Law puts crime
victims on a different footing from civil creditors generally, and provides
special mechanisms to assist them to obtain compensation for physical and
mental injuries suffered at the hands of the convicted person. Courts have
long held that R.S.S.L. § 110 and similar statutes do not bar special classes of
creditors, such as spouses and dependents, from access to pension proceeds
where necessary to effectuate compelling public policies. See Majauskas v.
Majauskas, 61 N.Y.2d 481, 493 (1984) (“such provisions have been
26
consistently construed not to have the effect of depriving the nonemployee
spouse of the rights accorded him or her upon dissolution of the marriage by
a decree of divorce”); McDermott v. McDermott, 119 A.D.2d 370, 377 (2d Dep’t
1986), appeal dismissed, 69 N.Y.2d 1028 (1987) (same for support of
dependents). So too here, § 632-a reflects a compelling public policy to
protect a special class of creditors, namely crime victims, and their access to
pension proceeds is similarly not barred by R.S.S.L. § 110 and similar
statutes. Indeed, permitting crime victims such access does not in any way
thwart the policy of R.S.S.L. § 110, namely to “protect public employee
pensions against improvidence and misfortune that might permit creditors or
assignees to upset the public policy considerations underlying the pension
scheme.” Id. The liability of convicted criminals to their victims is not the
result of mere “improvidence and misfortune.” For this reason as well, it
follows that R.S.S.L. § 110 and similar provisions limiting many creditors do
not limit actions brought by crime victims under the Son of Sam Law; that
law is limited only by exemptions specifically incorporated in the Son of Sam
law itself.
Nor is there any merit to Rauccis’ argument (Br. at 33-36) that
Raucci’s wife should have a right to his pension proceeds that is superior to
the right of his victims. To be sure, upon a divorce, Ms. Raucci would be able
27
to enforce her marital rights against the pension proceeds under this Court’s
decision in Majauskas, notwithstanding R.S.S.L. § 110. But that fact does
not give her a claim now that is superior to the claims of Raucci’s victims. Ms.
Raucci’s interest in Raucci’s pension is now at most an inchoate one, since
Raucci and Ms. Raucci are still married and no judgment providing for the
equitable distribution of their marital property has been entered. See
McDermott, 119 A.D.2d at 379 (holding that a spouse’s inchoate interest in
her husband’s pension does not mature into a “true ownership interest” until
a judgment of equitable distribution terminates the marriage); Hallsville
Capital v. Dobrish, 87 A.D.3d 933, 934 (1st Dep’t 2011) (funds in escrow
account are subject to attachment by a judgment creditor notwithstanding
that the funds are marital property, because no final judgment of divorce had
been entered when order of attachment was issued); see also Musso v.
Ostashko, 468 F.3d 99, 107 (2d Cir. 2006) (“A mere judicial declaration of
equitable distribution, without entry, cannot give a spouse an interest in
property superior to that of a creditor (or in this case, a trustee) holding a
1996) (“[t]he spouses’ respective rights in marital property do not vest under
New York law, however, until entry of a judgment dissolving the marriage. If
bankruptcy intervenes before the state court enters the judgment, the
28
trustee’s status as hypothetical lien creditor cuts off the non-debtor spouse’s
inchoate rights in marital property, and leaves her with a general unsecured
claim”) (citations omitted).
Indeed, the legislative history of the 2001 amendment to § 632-a makes
clear that the legislature intended to give a crime victim access to revenue
that the convicted criminal would otherwise give to a spouse, and only in the
circumstance where amounts were payable to the spouse herself, such as a
death benefit or inheritance not payable to the convicted person would
the amounts “not be subject to [garnishment] under this statute” (A31-32).
L. 2001, ch. 62, Senate Debate, June 21, 2001, at 10839-10840 (Statement of
Senator Nozzolio). Because the pension proceeds at issue here are payable to
Raucci, not his wife, who is at most his recipient or representative, they are
available to satisfy a civil judgment commenced by Raucci’s crime victims for
damages related to his crimes. The Rauccis’ suggestion that the Third
Department’s holding will encourage divorce (Br. at 36) is a policy argument
that is better addressed to the Legislature.
F. The 2011 Pension Forfeiture Law And The Office’s Prior Actions Do Not Support The Rauccis Here. The Rauccis mistakenly rely on the Legislature’s enactment of a
pension forfeiture statute in 2011 in support of their claim that the Son of
Sam Law does not supersede R.S.S.L. § 110 and C.P.L.R 5205 (Br. at 38-39).
29
The new statute, R.S.S.L. §§ 156-159, provides that certain public officials
who commit crimes related to their public offices may have their pensions
reduced or revoked. The Rauccis argue that because this statute, which
plainly supersedes R.S.S.L. § 110, is contained in the R.S.S.L. itself and
contains the proviso “notwithstanding any other law to the contrary”
R.S.S.L. § 157(1), § 632-a, which does not have those features, does not
supersede R.S.S.L. § 110. But the new pension forfeiture law is not relevant
here. By reducing or revoking a pension, the new law accomplishes
something much more drastic than § 632-a, which merely subjects pension
proceeds to the rights of a narrowly specified class of creditors. The structure
the Legislature chose for a pension forfeiture statute sheds no light on
whether it intended the Son of Sam Law to supersede R.S.S.L. § 110.
Finally, the Rauccis identify six individuals against whom they say the
Office has taken no action (Br. at A43-44) in support of their mistaken claim
that the Office’s position “prior to this case [was] that pensions are not
recoverable under the Son of Sam Law” (Br. at 36-38). This is not the proper
forum for determining whether the Rauccis’ factual claims are correct, and if
so why the Office acted as it did. For present purposes it suffices to note that
the Office (while it was still the Board) successfully enjoined convicted
persons from dissipating pension funds in at least two other cases. See New
30
York State Crime Victims Bd. v. Yoli (Sup. Ct. Albany Co. Index No. 5910-10,
Devine, J.) (Board could enjoin convicted person’s pension issued in
connection with his service as a New York City police officer) (A50-54); New
York State Crime Victims Bd. ex rel. Hayes v. Sookoo, 77 A.D.3d 1227
(affirming Supreme Court’s grant of preliminary injunction enjoining
convicted person from dissipating pension funds); see also New York State
Crime Victims Bd. v. Wendell, 12 Misc. 3d at 806 (federal military and civil
service retirement pay). And, in any event, the Office’s prior actions would
not estop it from bringing this proceeding. See Schorr v. New York City Dept.
of Housing Preservation and Dev., 10 N.Y.3d 776, 779 (2008) (estoppel cannot
be invoked against a governmental agency to prevent it from discharging its
statutory duties). For all these reasons, R.S.S.L. § 110 and C.P.L.R. 5205(c)
and (d) do not preclude the Office from obtaining a preliminary injunction
that preserves Raucci’s pension proceeds in order to satisfy a civil judgment
awarding damages to his victims.
G. Preliminary Injunctive Relief Was Proper.
Contrary to the Rauccis’ argument (Br. at 15, 19-20), there was nothing
wrong with the injunctive relief that the Third Department granted, which
simply deems Raucci, his agents or assigns to have directed the System to
31
pay him at the correctional facility where he is now incarcerated for deposit
in his inmate account rather than at his former residence. This relief is
within the court’s “inherent plenary power to fashion any remedy necessary
for the proper administration of justice.” 64 B Venture v. American Realty Co.,
194 A.D.2d 504, 504 (1st Dep’t 1993); see Town of Caroga v. Herms, 62 A.D.3d
discretion” to “fashion a suitable equitable remedy”).
The requested relief is necessary here. Since Raucci gave Ms. Raucci a
power of attorney, she received the checks and was endorsing and cashing
them (R. 223-224). It would be inequitable to permit Raucci’s pension
proceeds, which constitute “funds of a convicted person” and should therefore
be available to Raucci’s crime victims to satisfy any potential civil judgment
against him, to be insulated from his victims’ Son of Sam Law claims simply
because he has chosen to have the checks delivered to his home and has given
his wife a power of attorney. Accordingly, the Office’s requested injunction is
a reasonable, carefully tailored solution that gives effect to the remedial
purposes of the Son of Sam Law and permits the Office to carry out its duties
as mandated by law.
Moreover, the Office satisfied each of the prerequisites for the
preliminary injunction. As explained in Point I(A), above, R.S.S.L. § 110 and
32
C.P.L.R. 5205 do not bar this relief, and in addition, Raucci’s victims will
likely succeed on the merits of their actions against him, irreparable harm
will result to them if relief is not granted, and the equities balance in their
favor (R. 171-178). See Aetna Ins. Co. v. Capasso, 75 N.Y.2d 860, 862 (1990).
First, the Office established that the crime victims’ civil suits will likely
succeed on the merits because Raucci has already been convicted of crimes
based on the same facts on which the civil action depends. “Where a criminal
conviction is based upon facts identical to those in issue in a related civil
action, the plaintiff in the civil action can successfully invoke the doctrine of
collateral estoppel to bar the convicted defendant from relitigating the issue
of his liability.” McDonald v. McDonald, 193 A.D.2d 590, 590 (2d Dep’t 1993);
see D’Arata v. New York Cent. Mut. Fire Ins. Co., 76 N.Y.2d 659, 666-67
(1990).
Next, irreparable harm will result to the crime victims if the Rauccis
are not enjoined from transferring or spending Raucci’s pension funds. In the
absence of preliminary injunctive relief, the purpose of the Son of Sam Law
will be defeated because the crime victims will likely be deprived of any
substantial recovery in the underlying civil action (R. 174).
Finally, the equities balance in favor of the Office and the crime
victims. The Son of Sam Law reflects the Legislature’s judgment that crime
33
victims have a greater interest in recovering compensation for their injuries
than criminals have in protecting property from civil money judgments
awarded to their victims. See Senate Memo, McKinney’s 2001 Session Laws
of NY at 1312 (“[c]riminals should be held accountable to their victims
financially, regardless of their source of wealth”). This Court should
therefore affirm the Third Department’s order granting the Office’s
application for a preliminary injunction directing that Raucci be deemed to
have instructed the System to pay Raucci’s pension proceeds to him at the
correctional facility for deposit in his inmate account.
POINT II
THE RAUCCIS’ CONSTITUTIONAL CHALLENGES LACK MERIT AND THEIR CHALLENGE TO THE PENALTY PROVISION IS UNPRESERVED
A. Subjecting The Pension Proceeds To The Son Of Sam Law Does Not Violate Article V, § 7 Of The State Constitution. There is no merit to the Rauccis’ argument (Br. at 39-40) that the
application of the Son of Sam Law to Raucci’s pension proceeds violates the
pension non-impairment clause of the New York Constitution. See N.Y.
Const. art. V, § 7. That provision establishes a contractual relationship
between a pension plan and its members and declares that the benefits of
this relationship “shall not be diminished or impaired.” The purpose of this
34
provision is to prevent “reduction by the public employer of the financial
benefits promised in the pension contract,” either through alteration of the
formula for computing retirement benefits or by changes to “other incidents
of membership” in the retirement plan, including service or vacation credit
allowances. McDermott, 119 A.D.2d at 381-82 (summarizing cases).
“The short answer [to the Rauccis’ argument] is that” section 7 is not
implicated here because Raucci’s pension “is not diminished in the sense that
the pension fund will pay any lesser amount.” Majauskas v. Majauskas, 61
N.Y.2d at 493. In Majauskas, this Court held that subjecting the public
pension to the equitable distribution statute did not violate section 7. See id.
There is no violation here for the same reason. The Comptroller’s pension
payment on account of Raucci’s pension remains the same as previously
computed, and the Comptroller has not altered the benefits or imposed any
additional membership requirements in order for Raucci to receive it. The
fact that the pension proceeds are subject to the claims of Raucci’s victims
under the Son of Sam Law and to the Office’s authority to obtain a
preliminary injunction while a civil lawsuit brought by his crime victims is
pending does not constitute a diminution or impairment within the meaning
of the Constitution. Accordingly, the Son of Sam Law does not violate section
7.
35
B. The Rauccis’ Other Constitutional Argument Regarding Executive Law § 632-A(7)(b)(iv) Is Unpreserved, Unripe And Without Merit
The Rauccis’ concede (Br. at 46) that they have not preserved their
argument -- raised for the first time in this Court -- that Executive Law
§ 632-a(7)(b)(iv) effects an unconstitutional taking of Raucci’s pensions rights.
(Br. at 41-47.) “[T]his Court with rare exception does not review questions
raised for the first time on appeal. Unlike the Appellate Division, we lack
jurisdiction to review unpreserved issues in the interest of justice.” Bingham
v. New York City Trans. Auth., 99 N.Y.2d 355, 359 (2003). This rule applies
to any issue -- even a pure question of law; such an issue may sometimes be
reached by the court unpreserved, but only if the issue could not have been
avoided by factual showings or legal countersteps had it been raised below.
Id. Under the Bingham standard, respondents’ belated arguments are
unpreserved and therefore not properly before this Court. Here, the Office
could readily have opposed the Rauccis’ constitutional challenge by
demonstrating that the agency never invoked Executive Law § 632-a(7)(b)(iv)
or imposed a civil penalty upon Raucci for noncompliance with the Son of
Sam Law’s notice requirements.
Even if this claim were preserved, it should be rejected, both because it
is not ripe for review and because it is irrelevant to the issues before this
36
Court. Executive Law § 632-a(7) provides for penalty proceedings
“[w]henever it appears that a [non-State] person or entity has knowingly and
willfully failed to give [the] notice” required by § 632-a(2). See § 632-
a(7)(a)(1); see also (A18). L. 2001, ch. 62, Senate Debate, June 21, 2001 at
10873 (clarifying that the penalty provisions apply only if the Son of Sam
Law’s notice provisions are violated). No penalty has been imposed here, and
any consideration of a penalty would be premature since at least some
penalties cannot be initiated until after the extended statute of limitations
has expired. See § 632-a(7)(b)(iv). Accordingly, the Rauccis’ constitutional
challenges to the penalty provisions are not relevant to the question whether
the proceeds of Raucci’s pension are subject to the Son of Sam Law, and
further are not ripe for review, since the Office has not sought to impose any
penalty on Raucci here. See Church of St. Paul & St. Andrew v. Barwick, 67
N.Y.2d 510, 519-20 (1986) (claim is not ripe where it requires the Court to
consider “extraneous problems or factors beyond the legal questions
presented,” and where the harm asserted “may be prevented or significantly
ameliorated by further administrative action or by steps available to the
complaining party”). Consequently, this Court should reject the Rauccis’
constitutional challenges to the penalty provision as well.
37
CONCLUSION
The Third Department’s opinion and order should be affirmed and the
Office’s application for a preliminary injunction, including its request that
the Court direct that the Rauccis be deemed to have directed the System to
have place Raucci’s pension payments in his inmate account, should be
granted.
Dated: Albany, New York December 5, 2012 Respectfully submitted,
ERIC T. SCHNEIDERMAN Attorney General of the State of New York Attorney for Petitioner-Respondent
By:___________________________
OWEN DEMUTH Assistant Solicitor General
Office of the Attorney General The Capitol
Albany, New York 12224 (518) 486-4087 BARBARA D. UNDERWOOD Solicitor General ANDREW D. BING Deputy Solicitor General OWEN DEMUTH Assistant Solicitor General
