WESTCHESTER v. THE STATE OF NEW YORK, #2001-013-024, Claim No. 95194, Motion No.
Reciprocal defense provision in a contract between the State and the County of
Westchester does not require that each party provide its own defense in claims
arising from the contract simply because there may in some instances be a
conflict of interest if one party is obligated to defend or provide a defense
for the other. That portion of the County's private attorneys' bill which
represents efforts directed toward persuading the State to provide a defense
will not be deducted from the award.
THE COUNTY OF WESTCHESTER
Footnote (claimant name)
THE STATE OF NEW YORK
Footnote (defendant name)
PHILIP J. PATTI
WILSON, ELSER, MOSKOWITZ, EDELMAN AND DICKER, LLPBY: CHARLES M. FEUER, ESQ.
HON. ELIOT SPITZER
Attorney General of the State of New York
BY: J. Gardner Ryan, Esq.Assistant Attorney General
November , 2001
See also (multicaptioned
On August 15, 2001, the following papers were read on Defendant's motion to set
aside a prior decision of this Court pursuant to CPLR 4404:
1. Notice of Motion and Supporting Affirmation of J. Gardner Ryan, Esq.,
Assistant Attorney General, with Annexed Exhibits ("Ryan Affirmation")
2. Affirmation in Opposition of Charles M. Feuer, Esq., with Annexed Exhibits
3. Filed Papers: Claim; Answer; Decision and Order filed May 6, 1999 ( Motion
No. M-58341, Cross-Motion No. CM-58626); Decision filed June 11, 2001
This is a claim to recover the amounts paid by Westchester County for legal
representation in connection with its defense in a Federal civil rights action.
That action arose from the November 1985 death of James Smiley, an inmate of
Sing Sing Correctional Facility (Sing Sing). The inmate's estate sued several
State defendants and also named as defendants Westchester County Medical Center
(WCMC) and two of its employees, Dr. Kenneth Lerrick and Bernard Weinstein. It
was alleged that Dr. Lerrick committed medical malpractice in his treatment of
Smiley; that Weinstein, an administrator of WCMC and/or a supervisor of the
County medical facilities, negligently failed to promulgate rules and
regulations and to adequately supervise the care given to the decedent; and that
WCMC was vicariously liable for the acts of its employees.
At the time that James Smiley was being treated at WCMC, an agreement between
the State of New York and Westchester County provided that inmates of Sing Sing
were to receive medical treatment at WCMC. In connection with such treatment,
the agreement provided, in the first paragraph of Article 1, Section 5, the
following: (1) that the State would indemnify the County and its officers,
employees and agents in connection with claims "arising directly or indirectly
out of the State's negligent or tortious acts or omissions in the performance of
this Agreement;" (2) that the State would "provide defense for and defend any
claims... arising out of this Agreement at its sole expense" and would also bear
all other costs and expenses related to such claims; and (3) that the foregoing
provisions were not to be construed as requiring the State to indemnify the
County or its employees "from its or their sole negligence." In a parallel
provision, contained in the second paragraph of Section 5, the County agreed to
identical terms with respect to the
When the County was sued by Smiley's estate in 1987, it did not initially
request that the State provide it with a defense. The County was represented
by the County Attorney until October 1990, when the law firm of Wilson, Elser,
Moskowitz, Edelman and Dicker (Wilson-Elser) was hired to continue the defense.
At the same time that it was engaged in defending the County in Federal court,
Wilson-Elser also engaged in continual discussions with representatives of the
Attorney General on the issue of whether the State was responsible for providing
a defense in the lawsuit. These discussions related to whether the State was
responsible under either the Agreement or under Corrections Law §24-a. The
Federal claims against Dr. Lerrick and Mr. Weinstein were dismissed on September
30, 1994, and several years later, settlement was reached in the Federal claims
against the State. Discussions and negotiations regarding the issue of whether
the State had been obliged to provide a defense to the County continued until a
May 23, 1996 letter from Donald P. Berens, Deputy Attorney General, finally
denied the request. The instant claim ensued.
In 1999, the parties cross-moved for summary judgment. I denied both motions,
finding that there was an ambiguity in the contract with respect to whether the
State was obligated to provide a defense through its Office of the Attorney
General or to pay for private attorneys selected by County defendants, or both.
I determined, however, that the State's obligation to "provide a defense and
defend" was an obligation owed to "the County, its officers, employees and
agents" referenced in the first sentence. In so ruling, I rejected the
State's contention that the contractual provisions relating to defense obliged
each party to defend claims filed against it "at its sole expense"
(i.e., that the State was solely responsible for defending any
claims filed against the State and the County was solely responsible for
defending any claims brought against the County). I reiterated this holding in
the subsequent trial decision:
I therefore conclude that the defense clause obliges the State to "provide
defense for and defend [the County, its officers, employees or agents from and
against] any claims or causes of action of any kind or character directly or
indirectly arising out of this Agreement."
(Opn at 12.) Further, I held that the claims brought by the Smiley estate
against the County defendants were ones "arising out of" the Agreement, since
they related to medical care provided by the County to an inmate of Sing Sing;
that the County defendants were entitled to representation by counsel of their
own choosing, to be paid for by the State; that the County had provided the
State with timely notice of the claims against WCMC and its employees; and that
the action against the State was timely, because it had been commenced six
months after the May 1998 Federal court order dismissing the Smiley claims. I
awarded the sum of $300,118.16 to Claimant, Westchester County.
Current Motion: Interpretation of Section 5 of the Agreement
In concluding that the County defendants were entitled to representation by
counsel of their choice, to be paid for by the State, I stated that this was so
because there was a "clear conflict of interest" between the County defendants
and the State, whose own employees were also defendants in the Federal action.
It would have been inappropriate for the State to directly defend the County
because the State's own interest was best served by establishing that Smiley's
death was caused by the "sole negligence" of County officials.
Defendant has taken the existence of this conflict of interest as further
support for its position that the reciprocal defense provisions of Section 5
should be read to impose on each party the responsibility for its own
defense in all claims arising under the Agreement. According to defense
counsel, this conflict would always be present because "[i]n every case that
could arise under the Agreement the financial interest of the defending party to
avoid contractual liability for indemnity is necessarily at odds with the
professional responsibility of undivided loyalty to the interests of the party
defended" (Ryan Affirmation, ¶10). In other words, where the County was
sued, the State would have a financial interest in proving that the negligence
of County officials was the sole cause of any injury while, at the same time,
the State would have an ethical, professional obligation to defend those same
officials. Defendant argues, therefore, that the contract should not be
interpreted in such a way that it is impossible for the parties to perform their
obligations without violating ethical requirements. Claimant simply urges that
the Court adhere to its original interpretation of the clause.
If I were to accept Defendant's argument that a conflict of interest would
inevitably arise whenever the State attempted to fulfill its duty to "provide a
defense for and defend" the County (or, conversely, whenever the County
attempted to fulfill its contractual duty to provide a defense for and defend
the State), there would be reason to question the earlier holding. The language
of the contract clearly contemplates that, at least in some instances, the party
owing the duty will be able to fulfill it directly (i.e., by
"defending," as opposed to "providing a defense" by paying outside counsel).
Neither party could ever directly defend the other if the conflict of interest
that is present in the instant case was an inescapable feature of every claim
relating to WCMC's treatment of Sing Sing inmates. This view is not accurate,
however. A conflict will arise only when the claim is brought against both
State and County officials. When the only defendants are County
officials and employees, or County employees and defendants other than the
State, there is no inherent conflict of interest. The fact that such a
conflict will arise in some instances does not invalidate a contractual or
statutory obligation to provide a defense. Cases involving insurers and the
State itself, particularly those relating to the State's defense obligations
under Public Officers Law §17, demonstrate that the mechanism of paying for
the services of outside counsel is an accepted and frequently used way to avoid
ethical impropriety when circumstances create a conflict of interest between the
party owing a defense and the party to whom the defense is owed.
Current Motion: Calculation of Award
Defendant also objects to the amount of damages awarded to Claimant. The
$300,118.16 award was arrived at by deducting from the total bill for legal
services that was presented by Wilson-Elser the sum of $36,000.00, which
represented "the fees expended by the County in pursuit of its rights under the
Agreement" (Opn at 17-18), that is, the fees associated with prosecuting this
Court of Claims action. Defendant argues that additional amounts should be
deducted because some of the law firm's work prior to institution of this action
was "attributable to the effort, initiated in 1991, to obtain compliance and/or
enforcement of the defendant's purported contractual obligation to provide a
defense" (Ryan Affirmation, ¶3).
There is some logic to this argument. It is well-settled that when an insurer
or other party breaches its duty to provide a defense, the party to whom the
duty was owed may recover amounts it expended in "counsel fees, professional
services and disbursements" in connection with providing its own defense in the
action. It is also well-settled that, other than taxable costs, the wronged
party may not recover sums it expends in an affirmative action brought either to
enforce the duty to defend or to secure compensation for breach of that duty
(Mighty Midgets v Centennial Ins. Co.
, 47 N Y 2d 12, 21; Doyle v
Allstate Ins. Co.
, 1 NY2d 439.
extension, one could argue -- as the State does here -- that those hours spent
by a defendant's counsel carrying out discussions and negotiations in an
attempt to secure an agreement to defend prior to commencing a lawsuit to
enforce the right to a defense, are of the same nature and character as those
hours spent after commencement of the lawsuit. Defense counsel has cited to no
authority for this proposition, however, and research has not disclosed any
decision in which such an analogy was made and a subsequent reduction in the
The lack of such authority may well reflect public policy or a desire to avoid
inquiry into the minute-by-minute nature of every action taken by attorneys who
are engaged in their client's defense. It is safe to say that whenever an
insurer or other party that arguably owes a duty to defend does not immediately
agree to provide or pay for such defense, the attorneys hired by the party to
whom the duty is owed will expend some time in making demands and attempting to
secure their client's rights without resorting to a lawsuit. That is simply
part of representing their client's best interests. The time consumed by this
endeavor will vary greatly -- from a simple demand letter or a few phone calls
to an extended series of meetings -- and that time will inevitably be billed in
connection with the underlying action against their client. Consequently, in
every action arising from a breach of the duty to defend, some portion of the
total bill for "counsel fees, professional services and disbursements" will
represent prelitigation efforts to secure the right to a defense. To exclude
expenses associated with such efforts from the recovery allowed by law, there
would have to be an allocation in every instance. The net effect would
inevitably be to discourage efforts to resolve the matter by agreement.
Although I can understand the reasoning of Defendant's argument, I have found no
authority to support reducing the award by an amount representing the attorneys'
prelitigation efforts to persuade the State to provide or pay for the defense
that it owed to the County, and I am not inclined to make such a novel,
far-reaching ruling in the absence of such authority.
Defendant's motion is denied.
Rochester, New York
HON. PHILIP J. PATTI
Judge of the Court of
The entire text of these provisions is set
out in the earlier decision.
The party owing the duty to defend is liable,
however, for attorney's fees incurred if the other party is placed in a
defensive posture by a suit brought to establish that no duty is owed, on the
theory that the duty to defend encompasses the defense of any
arising out of a particular occurrence (Chase Manhattan Bank v Each
Individual Underwriter Bound to Lloyd's Policy No. 790/004A89005
, 258 AD2d
1, 4; Mighty Midgets v Centennial Ins. Co.