New York State Court of Claims

New York State Court of Claims

SCOTT v. THE STATE OF NEW YORK, #2004-013-064, Claim No. 107168, Motion No. M-68376


Defendant's motion to dismiss the third-party action is granted.

Case Information

Claimant short name:
Footnote (claimant name) :

Footnote (defendant name) :

Third-party claimant(s):
Third-party defendant(s):
Claim number(s):
Motion number(s):
Cross-motion number(s):

Claimant's attorney:
Defendant's attorney:
Attorney General of the State of New York
BY: REYNOLDS E. HAHN, ESQ.Assistant Attorney General
Third-party defendant's attorney:
Signature date:
December 30, 2004

Official citation:

Appellate results:

See also (multicaptioned case)


On June 16, 2004, the following papers were read on Third-Party Defendant's motion to dismiss the third-party action:

Notice of Motion, Affidavit, Exhibits Annexed and Memorandum of Law

Opposing Affirmation, Affidavits, Exhibits Annexed and Memorandum of Law

Reply Affidavits, Exhibits and Reply Memorandum of Law

Letter from Third-Party Defendant dated June 18, 2004

Letter from State of New York dated June 21, 2004

Filed Papers: Claim; Third-Party Complaint

Upon the foregoing papers, and after hearing Scott R. Jennette, Esq., on behalf of the Third-Party Defendant and Reynolds E. Hahn, Assistant Attorney General, on behalf of the Defendant and Third-Party Claimant, the motion is granted and the third-party complaint is dismissed.

The Court has before it the motion of the Third-Party Defendant Rochester Gas and Electric Corporation (RG&E) to dismiss the third-party action brought by the State of New York, the Third-Party Claimant (and Defendant in the main action), on the ground that the Court of Claims does not have subject matter jurisdiction to adjudicate the claims of the State of New York against RG&E pursuant to the New York Constitution article VI, § 9, and Section 9 of the Court of Claims Act.

A brief recitation of the underlying allegations will be instructive. Claimant Johnathon Scott was injured on November 27, 2001 when he fell from a ladder that was leaning up against a utility pole purportedly owned by RG&E and the Ogden Telephone Company. A general contractor (Crystal Construction Corporation) had been hired to construct a new car wash for Gateway Commons Development Corporation (Gateway) and subcontracted with Callea Electric Corporation, Inc. (Callea) to install electrical service. Claimant[1] was an employee of Callea, and brought a claim against the State of New York as owner of the land, alleging negligence in violation of Labor Law §240(1).

Claimants have sought relief in Supreme Court against RG&E, Ogden Telephone Company, Gateway, Crystal Construction Corporation (Crystal), et al. Gateway and Crystal com-menced a third-party complaint against Callea seeking common-law indemnification. Certain aspects of proceedings in the Supreme Court action remain pending following review by the Appellate Division, Fourth Department, the details of which are unnecessary for purposes of the instant motion (see Exhibits B - F to the Third-Party Defendant's motion).

The preliminary question before me, when distilled to a single determinative factor, is whether the Third-Party Defendant, RG&E, can be considered an "insurer" within the meaning of that term as it is used in Court of Claims Act §9(9-a). If answered in the affirmative, I would proceed to examine other issues raised. If answered in the negative, my inquiry is over, for the Court would lack jurisdiction over the Third-Party Defendant, the motion would be granted and the third-party complaint dismissed.

The Defendant/Third Party Claimant's arguments, that when RG&E provided the undertaking for the State's benefit in consideration of the issuance of the permit in question (Exhibit B to Third-Party Claimant's opposing papers) it acted as an insurer, are attractive, logical and enticing. And indeed, RG&E's status as a public service corporation, and not a private contractor hired by the State of New York, permits it to provide an undertaking in lieu of providing a certificate of insurance. RG&E argues persuasively that it is a public service corporation, not an insurance company, and thus it falls outside the purview and intent of Court of Claims Act §9(9-a).

The operative language of Section 9(9-a) provides that the Court of Claims shall have jurisdiction:
To make a declaratory judgment as defined in section three thousand one of the civil practice law and rules with respect to any controversy involving the obligation of an insurer to indemnify or defend a defendant in any action pending in the court of claims, provided that the court shall have no jurisdiction to enter a judgment against an insurer pursuant to this subdivision either: (i) for money damages; or, (ii) if the insurer would otherwise have a right to a jury trial of the controversy with respect to which the declaratory judgment is sought [emphasis supplied].

RG&E acknowledges that it is an indemnitor, and provided an undertaking as security for the permit it received, as opposed to providing a certificate of insurance naming the State of New York as an additional insured, and argues that this does not convert its status to that of an "insurer," seemingly a term of art supplied by the Legislature. When one looks for judicial precedent in this area, the history of Section 9(9-a) (added by L1989, ch 487, §1), is some 15 years old, but even with that, reported decisions and judicial review have been sparse.

However, in Sangirardi v State of New York, 152 Misc 2d 423 (1991), the late Judge Gerard M. Weisberg, a former member of the State Legislature, had occasion to visit the distinction between an indemnitor and an insurer in the context of Court of Claims Act §9(9-a). He observed that:
[T]he statute is limited to insurers. Unfortunately, it does not define the term. The legislative history indicates that a major, if not the sole, reason for the statute was to avoid having matters that could be completely determined by the Court of Claims have to be partially determined by the Insurance Department. (See, Gordon v State of New York, 146 Misc 2d 479, 481, supra.) Inasmuch as the latter regulates insurance companies, clearly "insurer" encompasses insurance companies. But does it include more?
Case law in another context has held that contractors who procured liability insurance for the benefit of third parties were not transformed into insurance companies by such conduct. (See, e.g., People v Westchester Colprovia Corp., 1 AD2d 724.) Moreover, and most importantly, insurance is a specific type of indemnity contract. (See, 68 NY Jur 2d, Insurance, § 501.) If the Legislature intended to subject all indemnitors to the jurisdiction of this court, it would presumably have employed that term instead of the more limited "insurer." We therefore hold that a contractor with a tort or contractual obligation to indemnify a defendant in this court is not an insurer within the meaning of section 9 (9-a) [emphasis supplied].

(Sangirardi v State of New York
, supra at 428.)

RG&E applied to the New York State Department of Transportation (DOT) for a permit to perform certain work (Exhibit A to the State's opposing papers), and a permit was granted (Exhibit H). The permit required protective liability insurance coverage from the applicant in accordance with DOT requirements. Generally that required "a Certificate of Insurance for Highway Permits Insurance (Form PERM 17, NYSDOT)." Notably, and of significance here, the highway work permit application provided a specific exception that:
Undertakings are limited to Public Service Corporations and government units. They must be executed through an insurance/bonding company and are subject to approval by NYSDOT Office of Legal Affairs.

It is clear that had RG&E been required to provide a Certificate of Insurance naming the State of New York as an additional insured, the instant proceeding would not have arisen, and the obligations pursuant to such insurance coverage unlikely to be the subject of litigation.

But RG&E is a Public Service Corporation, and it was DOT (and by extension the State of New York) which allowed an undertaking as security for the permit. The undertaking itself (Exhibit I to the motion papers and Exhibit D to the Pease affidavit in opposition) provides in Paragraph 5, that it is "one of indemnity only and is not to be construed as an undertaking or obligation to pay claims for which there would not otherwise be a remedy in law." The State argues that RG&E "elected" to provide the undertaking in lieu of a certificate of insurance. But here RG&E utilized an option offered by the State, and submitted an undertaking that was accepted by the State, regardless of whether it was "executed through an insurance/bonding company" as it was also "subject to approval by NYSDOT Office of Legal Affairs."

It appears that it was the State which permitted this option and the State which accepted the undertaking as it was submitted.

It is difficult to distinguish the clarity of the holding in Sangirardi, supra. And even were I inclined to do so, the Fourth Department has recently reiterated the principles governing review of legislative intent in the enactment of statutes. In Roberts v State of New York (11 AD3d 1000), the court found that Court of Claims Act §10(6) did not apply to inmate claims for lost or damaged personal property (§10 [9]), as that remedy is expressly available only to a litigant "as provided in the foregoing subdivisions," which obviously does not include subdivision (9), a subsequent subdivision. The Court concluded "that the failure to include inmate property claims in the subdivisions preceding subdivision (6) when they were specifically made the subject of subdivision (9) ‘may be construed as an indication that [their] exclusion was intended' (McKinney's Cons Laws of NY, Book 1, Statutes §74)."

Could use of the more limiting term "insurer" have been any less intended in the matter at bar? I think not. Insurance Law §1101(a)(1) defines the parties to an insurance contract as the "insurer" and the "‘insured' or ‘beneficiary'" where the insurer is obligated to confer benefit of pecuniary value, dependent upon the happening of a fortuitous event, as defined in Section 1101(a)(2).

I decline the State's invitation to expand the intention of the Legislature and broaden the meaning of the term insurer. When Judge Weisberg, a former legislator and highly regarded jurist, has addressed the very subject, and when his legal analysis has remained inviolate without appellate or trial court review in the official reports for more than thirteen years, I feel bound to agree with him that the Legislature would have used the term "indemnitor" instead of the more limited "insurer" (Sangirardi v State of New York, 152 Misc 2d 423, supra at 428) if it had intended to include indemnitors. The Legislature did not do so.

I am conscious of the fact that this decision may cause the Defendant to review its present policy of dealing with public service corporations. If a statute or regulation mandated such option for public service corporations, it has not been brought to my attention. It appears that the option to provide an undertaking in lieu of a certificate of insurance is one gratuitously offered by the State, and it would not be surprising if the State revisited the exception. It is only speculation, but I would suppose that such a change would entail greater expense and paperwork, and would have fiscal repercussions for such public service corporations, and for those to whom these additional expenses would be allocated.

But, in the end, I can only apply the statute to the facts, and here, it does not apply. The motion is granted and the third-party complaint is dismissed.

December 30, 2004
Rochester, New York

Judge of the Court of Claims

  1. [1]The claim of Tina Scott is derivative, and, unless otherwise noted, the term Claimant shall mean Johnathon Scott only.