Elliott Scheinberg

This two-part article examines the troublesome issue of whether standing (a) goes to subject matter jurisdiction; (b) is jurisdictional, or has a jurisdictional effect sufficient to be properly raised for the first time on appeal, including sua sponte; or (c) may be waived by inaction of a party, thereby nonjurisdictional.

Plainly, a successful timely challenge to standing neutralizes the would-be plaintiff. The inconsistent case law at all appellate levels has made this issue arduous and unpredictable. This article argues that the most recent pronouncements from the Court of Appeals advance the conclusion that standing is jurisdictional, albeit, plainly, not subject matter, may not be waived, and may be raised for the first time on appeal.

Part I begins with a synopsis of the epicenter of appellate review, the doctrine of preservation, also subject matter jurisdiction, and the inconsistent treatment of standing in the First Department. Part II continues with: (a) the Second Department’s treatment of this issue; (b) the inconsistent decisions in the Third Department; and (c) the interrelationship between aggrievement, jurisdiction, justiciability and genuine controversy, as more recently set forth in case law from the Court of Appeals.

Preservation

“Fundamentally, the doctrine of preservation mandates that an issue is preserved for appellate review, and thus is available as a basis for reversal or modification of an order or judgment, only if it was first raised in the nisi prius court,” as in Sam v. Town of Rotterdam, 248 A.D.2d 850 (3rd Dept 1998). In Rentways v. O’Neill Milk & Cream, 308 N.Y. 342 (1955), the Court of Appeals underscored the oft-cited principle:

It is quite true that an appellate court should not, and will not, consider different theories or new questions, if proof might have been offered to refute or overcome them had they been presented at the trial.

Although the Court of Appeals emphasized that “the requirement of preservation is not simply a meaningless technical barrier to review” (Wilson v. Galicia Contracting & Restoration, 10 NY3d 827 (2008)), the court, in its landmark decision, Telaro v. Telaro, 25 N.Y.2d 433 (1969), nevertheless, repeated an exception to the principle in Rentways:

Thus, it has been said: ‘if a conclusive question is presented on appeal, it does not matter that the question is a new one not previously suggested. No party should prevail on appeal, given an unimpeachable showing that he had no case in the trial court.’

Decisional authority continues to evolve exceptions to the rule of preservation, thereby making them proper for consideration first time on appeal. The most commonly known, and by no means exhaustive, are legal arguments, questions of law (People v. Knowles, 88 NY2d 763 (1996)); statutory interpretation (People v. Newman, 32 N.Y.2d 379 (1973)); legislative intent and construction (American Sugar Refining Co. of New York v. Waterfront Commission of New York Harbor, 55 N.Y.2d 11 (1982)); and statutory applicability (In re Will of Schuyler, 133 AD3d 1160 (3d Dept. 2015)). There are also many issues (beyond the scope and spatial limitations of this analysis) where case law has allowed and disallowed the same issue first time on appeal.

Whether a party has sustained the right to seek relief should therefore be a proper inquiry even first time on appeal.

Standing Is a Threshold Issue

Standing is a procedural matter. (See In re Estate of Palma, 40 AD3d 1157 (3d Dept 2007).) “The standing analysis is, at its foundation, aimed at advancing the judiciary’s self-imposed policy of restraint, which precludes the issuance of advisory opinions,” according to Community Board 7 of Borough of Manhattan v. Schaffer, 84 NY2d 148 (1994).

“The various tests that have been devised to determine standing are designed to ensure that the party seeking relief has a sufficiently cognizable stake in the outcome so as to ‘cast[ ] the dispute in a form traditionally capable of judicial resolution,’” Community Board 7 of Borough of Manhattan, quoting Society of Plastics Industry v. County of Suffolk, 77 NY2d 761 (1991)).

In Saratoga County Chamber of Commerce v. Pataki, 100 NY2d 801, 812 (2003), the Court of Appeals underscored the status of standing as “a threshold issue” “critical to the proper functioning of the judicial system”:

It is a threshold issue. If standing is denied, the pathway to the courthouse is blocked. … The rules governing standing help courts separate the tangible from the abstract or speculative injury, and the genuinely aggrieved from the judicial dilettante or amorphous claimant.

In Society of Plastics Industry v. County of Suffolk, 77 NY2d 761 (1991), the court had previously emphasized that “standing is a threshold determination, resting in part on policy considerations,” repeated again in Association for a Better Long Island v. New York State Department of Environmental Conservation, 23 NY3d 1, 6 (2014).

Parenthetically, it merits attention that “standing and capacity to sue are related, distinguishable, legal concepts,” as in Wells Fargo Bank Minnesota, National Association v. Mastropaolo, 42 AD3d 239 (2d Dept 2007), citing Silver v. Pataki, 96 N.Y.2d 532 (2001). While the First Department distinguished the concepts, in In re Part 60 RMBS Put-Back Litigation, 155 AD3d 482 (1st Dept 2017), it noted that the terms are used interchangeably:

“Capacity requires an inquiry into the litigant’s status, i.e., its ‘power to appear and bring its grievance before the court’ (Community Bd. 7 of Borough of Manhattan v. Schaffer, supra at 155 … ), while standing requires an inquiry into whether the litigant has ‘an interest in the claim at issue in the lawsuit that the law will recognize as a sufficient predicate for determining the issue at the litigant’s request.’ … While capacity to sue and standing are different legal concepts, they have been used interchangeably.”

“Lack of capacity does not implicate the jurisdiction of the court; it is merely a ground for dismissal if timely raised as a defense,” according to Security Pacific National Bank v. Evans, 31 AD3d 278 (1st Dept 2006).

Standing, Subject Matter Jurisdiction

It is settled that a “judgment or order issued without subject matter jurisdiction is void, and that defect may be raised at any time and may not be waived,’” as in Montella v. Bratton, 93 N.Y.2d 424 (1999); Fry v. Village of Tarrytown, 89 NY2d 714 (1997).

Three decisions from the Court of Appeals have held that a challenge to standing is waived if not raised as an affirmative defense or by motion to dismiss—Fossella v. Dinkins, 66 NY2d 162 (1985); Dougherty v. City of Rye, 63 NY2d 989 (1984); Prudco Realty v. Palermo, 60 NY2d 656 (1983), thereby ruling that standing is not jurisdictional. Also, People v. Stith, 69 N.Y.2d 313 (1987): “The people’s argument that defendants lacked standing to contest the lawfulness of the seizure was raised for the first time at the Appellate Division and thus is not preserved for our review.”

The First Department: Standing Is Jurisdictional

The First Department has held that standing goes to subject matter jurisdiction and may therefore be raised first time on appeal sua sponte. In Stark v. Goldberg, 297 AD2d 203 (1st Dept 2002), citing the U.S. Supreme Court (Allen v. Wright, 468 U.S. 737 (1984)) and the Third Department, the First Department ruled:

“Standing goes to the jurisdictional basis of a court’s authority to adjudicate a dispute” … Therefore, the derivative action is properly subject to sua sponte dismissal despite the lack of any assertion by defendants of an objection to plaintiffs’ standing (Axelrod v. New York State Teachers’ Retirement System, 54 A.D.2d 827 … (3rd Dept. 1989).)

Similarly, Murray v. State Liquor Authority, 139 AD2d 461 (1st Dept 1988), held that “a party’s standing constitutes a question of subject matter jurisdiction.” In People ex rel. Spitzer v. Grasso, 54 AD3d 180 (1st Dept 2008), the First Department, again, emphasized that “[standing] goes to the very power of the court to act.” (In Uhlfelder v. Weinshall, 47 AD3d 169 (1st Dept 2007), the First Department affirmed standing sua sponte because it “is central to justiciability.”)

Consistent with these cases, the First Department has also held that standing is a question of law (People v. Knowles, 88 NY2d 763 (1996)), which may be raised first time on appeal; also Fleischer v. New York State Liquor Authority, 103 A.D.3d 581 (1st Dept 2013); Delgado v. New York City Board of Education, 272 A.D.2d 207 (1st Dept 2000), lv. denied 95 N.Y.2d 768 (2000).

The First Department: Standing Is Not Jurisdictional

The foregoing notwithstanding, the First Department has also held that standing does not go to subject matter jurisdiction and, concomitantly, may not be raised first time on appeal:

Mortgage Electronic Registration Systems v. Gifford, 133 AD3d 429 [1st Dept 2015]:

“Whether the action is being pursued by the proper party is an issue separate from the subject matter of the action or proceeding, and does not affect the court’s power to entertain the case before it” … The Supreme Court is a court of general jurisdiction, and indisputably has the power to entertain mortgage foreclosure actions, including “issues regarding the defense of lack of capacity or standing and waiver, had those issues been timely raised.”

Security Pacific National Bank v. Evans, 31 AD3d 278 (1st Dept 2006), appeal dismissed, 8 N.Y.3d 837 (2007), a sharply divided court held:

We cannot agree with [the] conclusion that a lack of standing divests the court of subject matter jurisdiction over the action. “The question of subject matter jurisdiction is a question of judicial power: whether the court has the power, conferred by the Constitution or statute, to entertain the case before it” (Matter of Fry, 89 N.Y.2d at 718 … ). Because New York’s Supreme Court “is a court of original, unlimited and unqualified jurisdiction” (Kagen v. Kagen, 21 N.Y.2d 532, 537 … (1968)), it is competent to entertain all causes of action, including mortgage foreclosure actions. The Court of Appeals and lower appellate courts [] have consistently held that pursuant to CPLR 3211(e), the failure to raise the defense of lack of standing in a motion to dismiss or answer results in a waiver of such defense.

Part II examines: (a) the Second Department’s treatment of this issue; (b) the inconsistent decisions in the Third Department; and (c) the interrelationship between aggrievement, jurisdiction, justiciability and genuine controversy, as more recently set forth in case law from the Court of Appeals.

Elliott Scheinberg is a member of New York State Bar Association committee on courts of appellate jurisdiction. He is the author of “Contract Doctrine and Marital Agreements in New York,” NYSBA, (3d ed. 2016). He is also a fellow of the American Academy of Matrimonial Lawyers.