Failure to raise an issue at the trial court level is generally considered a waiver of that issue on appeal. Notwithstanding, state courts recognize certain circumstances when raising an issue for the first time on appeal does not prejudice the adversary because the legal issue is “apparent on the face of the record.” 26th LS Series Ltd. v. Brooks. Some defenses may be raised even though not raised below, such as where a contract is void against public policy, see 159 MP Corp. v. Redbridge Bedford, LLC. There are others. For example, the Second Department in Franklin v. Hafftka held that an issue of whether fiduciary tolling applied in that action could nevertheless be reached by the appellate court “since it involves a question of law which appears on the face of the record and which could not have been avoided”. Similarly, in Glasheen v. Long Island Diagnostic Imaging, the Appellate Division there held that an issue of “proximate cause” under the circumstances of that case presented an unavoidable issue of law that could be raised even though not preserved.
Recently, the First Department considered an appeal from a Commercial Division order and had to determine whether the doctrine of in pari delicto is one of those defenses that could be raised on appeal even though not raised below. The answer? Yes.
In Matter of Wimbledon Fin. Master Fund, Ltd. v. Wimbledon Fund SPC the court affirmed Justice Shirley Werner Kornreich’s decision denying the respondent’s motion to dismiss a petition to set aside a fraudulent conveyance. Justice Kornreich ordered respondent to pay $700,000, plus attorney’s fees. Many issues were presented on appeal. Of note, however, was the one defense that was not raised below: in pari delicto. Recognizing that in pari delicto is a defense grounded in “unclean hands” the appellate panel concluded that indeed, this is one of those defenses that may be raised for the very first time on appeal. However, in that case, the court considered the defense but ultimately concluded that the defense does not apply to a fraudulent conveyance claim.
Preservation of issues for appeal can be a minefield for the appellate practitioner. If on appeal, you are faced with the “it wasn’t preserved below” argument, consider whether the issue (i) presents a legal issue “apparent on the face of the record”, (ii) is an “unavoidable issue of law” presented by the record, or (iii) falls within those categories of defenses that the courts have recognized cannot be waived (e.g., public policy, unclean hands, to name a few).
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