New York State Court of Claims

New York State Court of Claims

KENMORE – TONAWANDA v. STATE OF NEW YORK and NEW YORK STATE INSURANCE FUND, #2004-030-911, Claim No. 107943, Motion No. M-67672


Synopsis



Case Information

UID:
2004-030-911
Claimant(s):
KENMORE – TONAWANDA SCHOOL DISTRICT
Claimant short name:
KENMORE – TONAWANDA
Footnote (claimant name) :

Defendant(s):
STATE OF NEW YORK and NEW YORK STATE INSURANCE FUND
Footnote (defendant name) :

Third-party claimant(s):

Third-party defendant(s):

Claim number(s):
107943
Motion number(s):
M-67672
Cross-motion number(s):

Judge:
THOMAS H. SCUCCIMARRA
Claimant's attorney:
Harris Beach LLPby Teresa Brophy Bair, Esq.
Defendant's attorney:
Eliot Spitzer, Attorney General
by Eidin Beirne, Assistant Attorney General
(for the State of New York)

Underberg & Kessler LLP
by Ronald G. Hull, Esq.(for the New York State Insurance Fund)
Third-party defendant's attorney:

Signature date:
May 12, 2004
City:
White Plains
Comments:

Official citation:

Appellate results:

See also (multicaptioned case)



Decision

The court read and considered the following papers on the State of New York's motion to dismiss the claim for failure to state a cause of action: Notice of Motion, Affirmation and Exhibits; Affidavit in Opposition, Affirmation.

Claimant seeks indemnification in the amount of $2.7 million representing the damages awarded in a personal injury action on behalf of a plaintiff named Lopez in which the claimant herein was the defendant, as well as associated interest, costs and attorneys' fees. The claim alleges the following series of events:

1. Lopez sued claimant for personal injuries sustained at a construction site at the Benjamin Franklin School, operated by the claimant.

2. Claimant filed a third-party action seeking indemnification against a construction company named Grove Roofing and obtained a default judgment in that action.

3. A judgment was entered in the main action, against the claimant, and was paid by the claimant.

According to the allegations of the claim, the State Insurance Fund (SIF) was Grove's workers' compensation carrier. After claimant demanded that the SIF indemnify it for the liability incurred in the Lopez action, pursuant to its contract with Grove and claimant's third-party judgment against Grove, claimant commenced the instant action, naming both the SIF and the State of New York as defendants.

In the instant motion, the State seeks an order dismissing the claim against it, arguing that the SIF is the sole proper defendant under these circumstances and that the claim fails to state a cause of action against the State.

The State's position is that since the SIF is represented by private counsel and any judgment herein will be paid from the SIF's own resources and not from funds set aside by the State of New York to pay Court of Claims judgments, it is not a proper party and this claim should proceed solely against the SIF.

In response to the State's motion, the SIF agrees that any judgment entered in this claim will be satisfied from the SIF's resources, and it does not oppose the State's motion to dismiss the claim against the State.

Claimant, however, does object to the requested relief, relying primarily on Cardinal v State of New York (304 NY 400) – "[t]his suit, being on an insurance policy issued by the State Insurance Fund (see Workmen's Compensation Law, §§ 76-99), was properly brought against the State itself, in the Court of Claims" – and a number of Court of Claims decisions applying on the holding of Cardinal.[1] Claimant also cites Matter of James v State of New York (90 AD2d 342, 343), in which the Appellate Division, Fourth Department wrote: "[t]he relationship between the State and the State Insurance Fund is such that the fund's liabilities are those of the State and a claim against the fund is properly brought against the State itself . . . Therefore, for the purposes of this opinion, no distinction will be made between them" (id.)[2]

In support of its position that the SIF, not the State, is the proper party defendant in a Court of Claims action when the action arises out of SIF activity, the State cites three decisions in which it was so named.[3] However, none of these three decisions contain any indication that the issue currently before the court was raised or discussed. In fact, contrary to the Assistant Attorney General's assertion that "I am not aware of any claim in which the State Insurance Fund and the State have both been named as defendants" (affirmation in support of motion to dismiss, par. 2, emphasis in original), the full caption of one of the three decisions cited by the Assistant Attorney General is Nature's Way v Commissioners of the State Insurance Fund and the State of New York.

The jurisdiction of the Court of Claims is conferred by statute. In the rare instances where this court has jurisdiction over an entity other than the State of New York, such jurisdiction results from enabling legislation that sets forth that an action against the entity must be brought in the Court of Claims. Thus, Public Authorities Law section 361–b provides that the Court of Claims has exclusive jurisdiction over tort and contract claims brought against the New York State Thruway Authority, Education Law section 6224(4) provides the same with respect to claims against the City University of New York for claims arising at senior colleges of CUNY, and Public Authorities Law section 1007(10) provides that claims arising out of the appropriation of real property by the Power Authority of the State of New York must be brought in the Court of Claims. In 1999, the Court of Claims Act was amended to add a new section 11(a)(ii) which provides that when a claim is brought against the Thruway Authority, CUNY, or the Power Authority, such entity must be separately served with the claim, in addition to the required service on the Attorney General.

There is no statute that provides that the Court of Claims has jurisdiction over the State Insurance Fund nor is there any statutory requirement that the Fund be separately served with process. The court's jurisdiction over claims arising out of SIF activity arises from the conclusion expressed in Cardinal v State of New York, 304 NY 400, supra, and the other authorities cited above, that the SIF is a State agency and not an entity with independent legal existence.

Because the State cannot point to any statute that provides that the Court of Claims has jurisdiction over the SIF as an entity independent from the State, it argues that the court should reach such a conclusion merely because the funds that would be used to pay any eventual judgment in this claim would come from SIF funds and not from the State's Court of Claims fund. The Court of Appeals' description of these two revenue sources as "one State pocket . . . [or] another" (Methodist Hosp. of Brooklyn v State Insurance Fund, 64 NY2d 365, 377, supra.) reveals the fallacy of that argument. Simply stated, there is nothing in statutory or case law that would support the conclusion that the SIF is a legal entity distinct from the State of New York, or that the State is not a proper party defendant under these circumstances. To the contrary, it appears that every court that has considered this question has reached the opposite conclusion.

Accordingly, the motion is denied.


May 12, 2004
White Plains, New York

HON. THOMAS H. SCUCCIMARRA
Judge of the Court of Claims



[1]Siciliano v State of New York (Ct Cl, Nadel, J., UID No. 2001-014-527): "The Court of Claims does not have jurisdiction over the State Insurance Fund as an entity distinct from the State of New York (see Cardinal v State of New York, 304 NY 400, 404, Matter of James v State of New York, 90 AD2d 342, 343). Thus, the Court has amended the claim's caption to reflect the proper defendant, and to delete the named State Insurance Fund"; see also S&R v State of New York (Ct Cl, Nadel, J., UID No. 2000-014-104) and Gruber v State of New York (Ct Cl, Fitzpatrick, J., UID No. 2002-018-146). Unofficially reported Court of Claims decisions may be found on the court's web site: www.nyscourtofclaims.state.ny.us.
[2]see also Marley Company v Boston Old Colony Ins. Co. (711 F. Supp. 153) and Methodist Hosp. of Brooklyn v State Insurance Fund (64 NY2d 365, 377) in which the Court of Appeals referred to the transfer of funds from the SIF to the State as a transfer "from one State pocket (the SIF) to another (State general funds)."
[3]Travelers Ins. Co. v Commissioners of the State Insurance Fund (642 NYS2d 867); Hart Hotels v State Insurance Fund (Ct Cl, Marin, J., UID No. 2000-016-110); Nature's Way v Commissioners of the State Insurance Fund (Ct Cl, Marin, J., UID No. 2002-016-028).