SCOTT v. THE STATE OF NEW YORK, #2004-013-064, Claim No. 107168, Motion No.
Defendant's motion to dismiss the third-party action is granted.
JOHNATHON SCOTT and TINA SCOTT, His Spouse
Footnote (claimant name)
THE STATE OF NEW YORK
Footnote (defendant name)
THE STATE OF NEW YORK
ROCHESTER GAS AND ELECTRIC CORPORATION
PHILIP J. PATTI
LIPSITZ & PONTERIO, LLCBY: JOHN P. COMERFORD, ESQ.
HON. ELIOT SPITZER
Attorney General of the State of New York
BY: REYNOLDS E. HAHN, ESQ.Assistant Attorney General
WARD, NORRIS, HELLER & REIDY, LLPBY: SCOTT R. JENNETTE, ESQ.
December 30, 2004
See also (multicaptioned
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.
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
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
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 ), 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,
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
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
Rochester, New York
HON. PHILIP J. PATTI
Judge of the Court of
The claim of Tina Scott is derivative, and,
unless otherwise noted, the term Claimant shall mean Johnathon Scott only.