Claimant's motion for summary judgment is denied as it failed to prove that the State Insurance Fund breached any duty to defend or to provide coverage, or was equitably estopped from disclaiming coverage. The State Insurance Fund's cross-motion for summary judgment is granted as its policy did not obligate it to defend or indemnify Claimant for Pennsylvania workers' compensation benefits.
|Claimant(s):||SAFESPAN PLATFORM SYSTEMS, INC.|
|Claimant short name:||SAFESPAN|
|Footnote (claimant name) :|
|Defendant(s):||THE STATE OF NEW YORK|
|Footnote (defendant name) :||The caption has been amended, sua sponte, to reflect the State of New York as the only appropriate Defendant before this Court.|
|Judge:||RENÉE FORGENSI MINARIK|
|Claimant's attorney:||RUPP, BAASE, PFALZGRAF, CUNNINGHAM &
BY: MATTHEW A. LENHARD, ESQ.
|Defendant's attorney:||HON. ELIOT SPITZER
New York State Attorney General
BY: EIDIN BEIRNE, ESQ.
Assistant Attorney General
|Third-party defendant's attorney:|
|Signature date:||June 25, 2004|
|Official citation:||20 Misc 3d 1117(A)|
|Appellate results:||21 AD3d 1373|
|See also (multicaptioned case)|
The Claimant, Safespan Platform Systems, Inc. (Safespan), brought a motion for summary judgment seeking indemnification from the State Insurance Fund (SIF) for its alleged breach of a workers' compensation insurance policy. The Defendant then cross-moved for summary judgment.
The following papers, numbered 1 to 5, were considered by the Court in connection with these motions:
1. Claimant's Notice of Motion (M-67279) and supporting affidavits of Matthew A. Lenhard, Esq. and of Dimitris Oktapodas, with annexed exhibits;
2. Memorandum of Law in support of Claimant's Motion for Summary Judgment;
3. Defendant's Notice of Cross-Motion (CM-67514) and supporting affidavit of Hal Friedman, with annexed exhibits;
4. Memorandum of Law in support of Defendant's Cross-Motion for Summary Judgment; and
5. Workers' Compensation Form C-669, submitted by Claimant's counsel at the time of oral argument and accepted, without objection, by the Court.
The facts are essentially undisputed. Safespan, a New York corporation located in Tonawanda, New York, builds platform systems that are used in bridge construction projects throughout the United States. Unless an employee resides in the state where a particular bridge project is located, Safespan withholds New York State income taxes from that employee's wages.
Safespan entered into a contract with Buckley & Company, Inc., the general contractor on the City Avenue Bridge Project in Philadelphia, Pennsylvania, to construct a cable suspended access and containment platform system. Pursuant to their contract, Safespan procured workers' compensation insurance through SIF.
Sigma Kappa Corporation, Safespan's agent and subcontractor on the Philadelphia Bridge Project, hired William A. Butterworth to work for Safespan on the bridge project while he was temporarily in Newark, Delaware.(2) At that time, Mr. Butterworth was a resident of West Virginia who had most recently resided in Cleveland, Ohio. For the first couple of weeks of his employment, Mr. Butterworth lived in a motel in Newark and commuted into Philadelphia every day to work on the bridge project. He subsequently moved to a hotel in Philadelphia. His rooms were paid for by Safespan.
On July 8, 2000, Mr. Butterworth injured his back, left shoulder and left arm while working on the Philadelphia Bridge Project, when he lost his balance while unloading pallets of rigging components. Safespan reported the accident to the Workers' Compensation Board of the State of New York on August 11, 2000 (see C-2 report, exhibit C annexed to Claimant's motion papers). The SIF began providing Mr. Butterworth with New York State workers' compensation benefits and continued to provide such benefits for approximately 11 weeks.
On August 14, 2000, three days after Safespan filed its C-2 report with New York State's Workers' Compensation Board, a Claim Petition for Workers' Compensation was filed on Mr. Butterworth's behalf in the State of Pennsylvania (see Claim Petition, exhibit F annexed to Claimant's motion papers). Apparently, after filing for New York State benefits, Mr. Butterworth discovered that Pennsylvania's workers' compensation benefits paid $611 a week in indemnity benefits, approximately $200 more per week than New York State.
According to Safespan's claim, SIF suspended payment of New York State workers' compensation benefits to Mr. Butterworth on September 25, 2000. On October 6, 2000, SIF filed a C-7 report contesting the jurisdiction of the New York State Workers' Compensation Board and contesting coverage (see exhibit E annexed to Claimant's motion papers). The record is devoid of evidence as to whether a hearing was ever conducted by the Workers' Compensation Board to determine if it had jurisdiction over this Pennsylvania accident, and there is no evidence to suggesting that either Safespan or Mr. Butterworth requested a hearing, or in any way contested the decision made by SIF to stop payment of New York State benefits.
By letter to Safespan dated October 25, 2000, SIF disclaimed coverage and refused to defend or make any payments imposed under the workers' compensation statute of the State of Pennsylvania because its policy covered liability imposed solely under the Workers' Compensation Law of the State of New York, and because its policy limited coverage to regular New York State employees (see exhibit G annexed to the Claimant's moving papers).
Safespan retained Pennsylvania counsel to protect its interests with respect to the workers' compensation petition filed by Mr. Butterworth in the State of Pennsylvania. On November 16, 2000 and on February 5, 2001, hearings were conducted by the Workers' Compensation Board of the State of Pennsylvania. Mr. Butterworth testified at both of these hearings (see excerpts of Mr. Butterworth's testimony annexed to Claimant's motion papers as exhibits I and J). On July 13, 2001, the Pennsylvania Workers' Compensation Board concluded that Mr. Butterworth was entitled to Pennsylvania Workers' Compensation benefits, including Mr. Butterworth's counsel fees and lost wage benefits at a rate of $611 a week. Safespan eventually settled with Mr. Butterworth for a lump sum indemnity payment of $45,000. Safespan claims that it incurred counsel fees and expenses in defending the Pennsylvania workers' compensation proceedings and was obligated to pay Pennsylvania benefits to Mr. Butterworth for a total of $96,930.02 (see claim, ¶¶ 14 to 17, 25, 30 and 36; and ¶¶ 12 and 13 of the supporting affidavit of Dimitris Oktapodas annexed to Claimant's motion papers and the recap of damages annexed thereto as exhibit A).The Policy
The SIF issued to Safespan policy number G 1173 888-7, covering the period of April 1, 2000 to April 1, 2001. The policy declaration sheet indicated that this policy covered:
...the entire obligation of this policyholder for workers' compensation under the New York Workers' Compensation Law with respect to all operations in the State of New York and, with respect to operations outside of New York, to the policyholder's regular New York State employees only (see policy declaration sheet annexed to Claimant's motion papers as exhibit H) (emphasis added).
The policy proper defined the term "Workers' Compensation Law" to mean the Workers' Compensation Law of the State of New York except as otherwise provided by endorsement (see exhibit H, General Section C). There were apparently no such endorsements as none were included with the policy provided. Section C of Part One of SIF's policy, the Workers' Compensation Insurance coverage, provided:
We have the right and duty to defend at our expense any claim or proceeding against you for benefits payable by this insurance. We have the right to investigate and settle these claims or proceedings. We have no duty to defend a claim or proceeding that is not covered by this insurance (Exhibit H, Part One, section C) (Emphasis added).
Safespan moves for summary judgment, alleging that SIF is obligated under the terms of its insurance policy to indemnify and to reimburse it for $96,930.02, representing the amount of Pennsylvania workers' compensation benefits Safespan paid to Mr. Butterworth, pursuant to the decision of the Pennsylvania Workers' Compensation Board and the settlement reached with Mr. Butterworth, plus the attorneys' fees and expenses Safespan incurred in contesting the Pennsylvania workers' compensation claim. The SIF cross-moves for summary judgment, alleging that it is not obligated under the terms of its policy to indemnify Safespan for any payments or fees Safespan made or incurred with respect to the Pennsylvania workers' compensation claim of Mr. Butterworth.
Safespan's Motion for Summary Judgment
Safespan alleges that SIF is obligated, under the terms of its policy, to defend and indemnify Safespan with respect to the workers' compensation claims filed by Mr. Butterworth in New York and in Pennsylvania. Safespan bases this argument on the language in the policy which obligates SIF to provide workers' compensation benefits to "regular New York State employees" for employment related injuries which occur outside the State of New York. According to Safespan, Mr. Butterworth was a regular New York State employee who was injured in Pennsylvania while employed by Safespan, and who was thus entitled to New York State workers' compensation benefits.
Because there does not appear to be any case law addressing the phrase "regular New York State employee," Safespan relies on case law addressing the jurisdiction of the New York Workers' Compensation Board to hear claims for benefits arising out of employment accidents which have occurred in another state. This case law is instructive because Mr. Butterworth would not be entitled to New York State workers' compensation benefits, in the first instance, if the Workers' Compensation Board of the State of New York does not have jurisdiction over his claim for benefits. In other words, if there are sufficient significant contacts with the State of New York so that it can be reasonably concluded that Mr. Butterworth's employment was located in the State of New York, then the Workers' Compensation Board of the State of New York would have jurisdiction over Mr. Butterworth's claim for New York State benefits. If, however, the circumstances of Mr. Butterworth's employment indicated that his employment was actually located in another state, then he would not be protected by the Workers' Compensation Law of the State of New York (Matter of Nashko v Standard Water Proofing Co., 4 NY2d 199, 201). Whether the New York State Workers' Compensation Board has jurisdiction is a factual determination based upon various factors, including where the employee resided, where the employee was hired and the location of the employer (Matter of Palagurchi v Mengs Serv., 302 AD2d 648, 649). In the present case, certain factors support a New York employment (New York employer and New York State income taxes withheld), and other factors support employment in another state (employee was a resident of West Virginia, residing in Ohio, hired in Delaware and injured in Pennsylvania). Where, as here, jurisdiction depends on numerous questions of fact, the courts may not be chosen to resolve these issues. Rather, such a determination must be made by the New York State Workers' Compensation Board, where the Legislature has placed the responsibility for these determinations (O'Rourke v Long, 41 NY2d 219, 228;Matter of Hartham v Fuller Co., 89 AD2d 720, 721; Workers' Compensation Law §20).
From the record, it does not appear that the Workers' Compensation Board of the State of New York ever made a determination as to its jurisdiction. Granted, SIF made payments to Mr. Butterworth for several weeks before filing a C-7 form contesting coverage and the jurisdiction of the New York State Workers' Compensation Board. In practice, however, voluntary payments are initially made in approximately 90% of all claims filed because it is not unusual for a claim to take several months to be determined by a workers' compensation law judge (McKinney's Cons. Laws of NY, Book 64, Workers' Compensation Law §20, Practice Commentaries, Martin Minkowitz, p. 195). Moreover, there is nothing in the record to even indicate that a hearing was held with respect to the issue of jurisdiction as raised by SIF in its C-7 form, and there is nothing in the record to establish that the workers' compensation law judge or the board ever made an award of benefits to Mr. Butterworth
Most likely, Mr. Butterworth voluntarily withdrew his claim for New York benefits and the workers' compensation law judge simply closed the file. In any event, Mr. Butterworth would not be entitled to New York State benefits unless it was determined that New York State had jurisdiction over this Pennsylvania accident, and this determination must be made in the first instance by the New York State Workers' Compensation Board and then appealed, if necessary, to the Appellate Division, Third Department (Workers' Compensation Law §23; Matter of Bock v Cooperman, 89 AD2d 539, affd 59 NY2d 776). Because there is no proof that the jurisdictional issue was ever determined and because there was apparently no award of New York benefits ever made to Mr. Butterworth, and because Safespan has never been held liable for New York benefits, Safespan has failed to meet its burden of proving that SIF breached its duty to provide New York State workers' compensation.
Safespan was, however, held liable for Pennsylvania workers' compensation benefits and it is these benefits for which Safespan is seeking to hold SIF responsible under the workers' compensation policy issued by SIF. As a general matter, the terms of an insurance policy should be construed as they would be understood by the ordinary person (Arthur A. Johnson Corp. v Indemnity Ins. Co., 7 NY2d 222). Because insurance policies are normally drafted by the insurer, such policies are construed strictly in favor of the insured and against the insurer (Loblaw, Inc. v Employers' Liab. Assur. Corp., 57 NY2d 872). The plain and unambiguous terms of this policy obligate SIF to provide workers' compensation under the New York Workers' Compensation Law. Nothing in the policy obligates SIF to provide Pennsylvania workers' compensation benefits or to defend the Pennsylvania claim or proceeding. To conclude, as Safespan suggests, that the policy obligates SIF to pay Pennsylvania benefits would be tantamount to adding an endorsement to the existing policy stating that SIF is responsible for workers' compensation benefits in whatever state they are awarded. I am not inclined to so conclude. Accordingly, Safespan has failed to meet its burden of proving that SIF was obligated under the terms of the workers' compensation policy to reimburse Safespan for the Pennsylvania workers' compensation benefits and attorneys' fees awarded to Mr. Butterworth in Pennsylvania, or for Safespan's attorneys' fees and expenses incurred in defending the Pennsylvania proceedings.
Safespan further argues that SIF should be estopped from denying coverage because SIF accepted the claim and defended Safespan, and failed to timely disclaim coverage. In making this argument, Safespan has intermingled the facts applicable to Mr. Butterworth's claim for New York workers' compensation benefits with the facts applicable to Mr. Butterworth's claim for Pennsylvania workers' compensation benefits.
Safespan contends that SIF assumed and controlled Safespan's defense to the detriment of Safespan and, thus, should be estopped from disclaiming coverage. To establish the doctrine of equitable estoppel, Safespan has to prove that it lacked knowledge of the true facts, relied upon SIF's conduct and changed its position to its detriment (First Union Natl. Bank v Tecklenburg, 2 AD3d 575; Rocky Point Props. v Sear-Brown Group, 295 AD2d 911; Airco Alloys Div. v Niagara Mohawk Power Corp., 76 AD2d 68). In this regard, Safespan is relying on SIF's initial payment of benefits to Mr. Butterworth with respect to Mr. Butterworth's claim for New York benefits.
Safespan fails, however, to establish any detrimental reliance upon SIF's actions in this regard. The fact remains that Safespan has never been held responsible for any New York workers' compensation benefits. Moreover, SIF disclaimed coverage with respect to Mr. Butterworth's claim for Pennsylvania workers' compensation benefits and there is no proof that SIF took any action with respect to the Pennsylvania proceedings upon which Safespan could rely to its detriment. In fact, after SIF disclaimed coverage with respect to Mr. Butterworth's claim for Pennsylvania benefits and before any Pennsylvania workers' compensation hearings were conducted, Safespan retained Pennsylvania counsel to protect its interests with respect to the Pennsylvania proceedings. Safespan's assertion that SIF somehow encouraged Mr. Butterworth to file a claim for Pennsylvania benefits is totally unsupported by the record. Simply stated, Safespan has failed to establish the necessary elements of an estoppel.
Finally, Safespan argues that SIF should be estopped from disclaiming coverage because it failed to timely serve a notice of disclaimer. Safespan relies again on SIF's initial payment of New York benefits for a period of approximately 11 weeks and its failure to disclaim coverage until October 25, 2000. Pursuant to New York Workers' Compensation Law § 21-a (3)and (4), however, an insurer may stop making payments of compensation benefits up to one year after commencement of such payments, upon notification, without losing its rights and defenses. Here, SIF filed a C-7 form (Exhibit E, annexed to Claimant's motion papers) on or about October 6, 2000, which gave notice that it was contesting jurisdiction and coverage. Safespan was in no way harmed by SIF's change in position with respect to coverage as there has never been a New York award of compensation benefits to Mr. Butterworth and Safespan has never been held responsible for New York workers' compensation benefits.
Nor may Safespan rely on a late disclaimer argument with respect to Mr. Butterworth's claim for Pennsylvania workers' compensation benefits. As discussed above, the SIF policy provided for workers' compensation benefits under the Workers' Compensation Law of the State of New York. Nothing in the policy obligated SIF to pay benefits under the Workers' Compensation Law of Pennsylvania or to defend Safespan with respect to an uncovered claim. Where, as here, no coverage existed under the policy, there is no duty to deny or disclaim coverage, and neither the doctrine of equitable estoppel nor of waiver(3) may be invoked to create coverage where none existed (Penske Truck Leasing Co. v Home Ins. Co., 251 AD2d 478; Zappone v Home Ins. Co., 55 NY2d 131; Schiff Assoc. v Flack, 51 NY2d 692).
SIF's Cross-Motion for Summary Judgment
SIF has cross-moved for summary judgment on the grounds that it had no obligation to defend or indemnify Safespan with respect to Mr. Butterworth's Pennsylvania workers' compensation claim, as its policy did not provide coverage for workers' compensation benefits under the law of the State of Pennsylvania, and its policy did not obligate SIF to defend a claim not covered by its policy. I agree. Where parties to an agreement set down their intentions in a clear, unambiguous and complete document, their agreement should be enforced according to its terms (W.W.W. Assos. v Giancontieri, 77 NY2d 157; Matter of Wallace v 600 Partners Co., 86 NY2d 543). SIF's cross-motion for summary judgment is granted.
Accordingly, it is hereby
ORDERED, that Safespan's motion for summary judgment (M-67279) is denied, and it is further,
ORDERED, that SIF's cross-motion for summary judgment (CM-67514) is granted and claim no. 105386 is dismissed. The Clerk of the Court is directed to close the file.
June 25, 2004
Rochester, New York
RENÉE FORGENSI MINARIK
Judge of the Court of Claims
2. On November 16, 2000, Mr. Butterworth testified, during a workers' compensation hearing conducted in Pittsburgh, Pennsylvania, that he was hired while he was in Newark, Delaware (see Claimant's exhibit I, p. 6). According to the affidavit of Dimitris Oktapodas, Safespan's Chief Financial Officer, Mr. Butterworth was hired in Newark, Maryland (see ¶6, Oktapodas affidavit annexed to Claimant's motion papers). For the purpose of this decision, it does not matter if Mr. Butterworth was hired in Delaware or in Maryland. Reference is made herein to Newark, Delaware simply because of its closer proximity to Philadelphia, the site of the bridge project.
3. The second cause of action in Safespan's claim can loosely be interpreted as alleging a claim under the doctrine of waiver. This doctrine was not mentioned in Safespan's motion papers and, to the extent it was raised in the claim, has apparently been abandoned. In any event, such a theory would be inapplicable, as SIF could not waive a right to disclaim coverage which never existed.