New York State Court of Claims

New York State Court of Claims
HOMESTEAD v. NEW YORK STATE INSURANCE FUND, # 2017-053-559, Claim No. 122681, Motion Nos. M-90738, CM-90873

Synopsis

The New York State Insurance Fund's motion to dismiss the amended claim in lieu of an answer is granted. The amended claim was filed without permission of the Court almost four years after the original claim. Claimant's cross motion seeking leave to amend the claim to assert additional claims for excess workers compensation insurance premiums charged is denied as the proposed claim would impermissibly expand the original claim and the new causes of action asserted were not timely asserted and are jurisdictionally defective.

Case information

UID: 2017-053-559
Claimant(s): HOMESTEAD REPAIR & RENOVATION, INC.
Claimant short name: HOMESTEAD
Footnote (claimant name) :
Defendant(s): NEW YORK STATE INSURANCE FUND
Footnote (defendant name) :
Third-party claimant(s):
Third-party defendant(s):
Claim number(s): 122681
Motion number(s): M-90738, CM-90873
Cross-motion number(s):
Judge: J. DAVID SAMPSON
Claimant's attorney: HOGAN WILLIG
BY: Thomas B. Hughes, Esq., Of Counsel
Rebecca M. Kujawa, Esq.
Defendant's attorney: HON. ERIC T. SCHNEIDERMAN
New York State Attorney General
BY: Timothy J. Flynn, Esq.
Assistant Attorney General
Third-party defendant's attorney:
Signature date: October 3, 2017
City: Buffalo
Comments:
Official citation:
Appellate results:
See also (multicaptioned case)

Decision

Claimant Homestead Repair & Renovation Inc. filed a claim on May 2, 2013, claim no. 122681, in which it alleges that it purchased a workers compensation insurance policy, policy no. B 976478-8, with defendant New York State Insurance Fund. On November 2, 2012, the defendant conducted an insurance premium audit by which claimant alleges that defendant breached its contract with claimant and claimant seeks to recoup from defendant $12,900.67, representing excess insurance premiums charged for an unspecified period of time, plus interest, attorneys fees and litigation costs. Claimant alleges that the money damages sought in this claim represent the total workers compensation insurance premium charged for payments made by claimant to outside labor and subcontractors that were added by defendant to claimant's payroll to calculate its audited workers compensation premium. The accrual date of this claim is alleged to be November 2, 2012. The defendant filed its answer on June 7, 2013, denying the allegations in the claim and asserted numerous affirmative defenses.

On April 13, 2017, claimant filed an amended claim in which it is asserted with respect to the same workers compensation insurance policy that an insurance premium audit was conducted on January 23, 2015, by which defendant added $100,019.00 in payroll charges to claimant's total payroll for an unspecified period of time representing payments made by claimant to outside labor and subcontractors and by which claimant has been damaged by defendant's breach of contract totaling $18,213.06, plus interest, attorneys fees and litigation costs. In addition to this new claim, three additional claims are asserted in the amended claim. The first additional claim results from a January 23, 2015 insurance premium audit, in which it is alleged that the defendant added $71,114.00 in payroll charges to claimant's total payroll representing payments made by claimant to outside labor and subcontractors and by which claimant alleges damages resulting from defendant's breach of contract totaling $9,528.60. The second additional claim results from a September 28, 2015 audit in which it is alleged that the defendant added $49,249.00 in payroll charges, representing payments made by claimant to outside labor and subcontractors and by which claimant alleges damages totaling $6,593.21. The third additional claim results from an August 16, 2016 audit in which it is alleged that the defendant added $69,800.00 in payroll charges, representing payments made by claimant to outside labor and subcontractors and by which claimant alleges damages totaling $8,810.13. For all three additional claims, the claimant also seeks interest, attorneys fees and litigation costs. Claimant alleges that the additional money damages sought in this amended claim represent the total workers compensation insurance premium charged by defendant for payments made by claimant to outside labor and subcontractors that were added to claimant's payroll by defendant to calculate its audited workers compensation premium.

The defendant filed a motion to dismiss in lieu of an answer to the amended claim, M-90738, pursuant to Court of Claims Act 9, 10 and 11, CPLR 3211 (a) (2, 7 and 8) and Uniform Rules for the Court of Claims 206.7 (a). Claimant opposes the motion and filed a cross-motion, CM-90873, by which it seeks leave to amend the claim pursuant to CPLR 3025 and any additional relief within the Court's jurisdiction pursuant to CPLR 3017 (a). Defendant opposes the cross-motion.

A party may amend a pleading once without leave of court within twenty days after its service, or at any time before the period for responding to it expires, or within twenty days after service of a pleading responding to it (CPLR 3025 [a]). The Uniform Rules for the Court of Claims provide that pleadings may be amended in the manner provided by CPLR 3025, except that a party may amend a pleading once without leave of court within 40 days after its service, or at any time before the period for responding to it expires, or within 40 days after service of a pleading responding to it (Uniform Rules for the Court of Claims 206.7 [b]). In this action, claimant filed its claim on May 2, 2013 and the defendant filed a verified answer to this claim on June 7, 2013. Claimant had 40 days after June 7, 2013 in which to file an amended claim but did not do so until April 13, 2017, almost four years later. As a result, claimant has no statutory authority to file and serve an amended claim upon defendant without leave of court. As the amended claim does not comply with CPLR 3025 (a) and Uniform Rules for the Court of Claims 206.7 [b], the amended claim is a nullity and defendant's motion to dismiss the amended claim in lieu of an answer is hereby granted.

In addressing claimant's cross-motion for leave to amend the claim, a party may amend or supplement its pleading by setting forth additional or subsequent transactions or occurrences at any time by leave of court (CPLR 3025 [b]). Leave to amend a claim is to be freely given "unless the proposed amendments plainly lack merit or would cause the nonmoving party to suffer prejudice or unfair surprise" (Bastian v State of New York, 8 AD3d 764, 765 [3d Dept 2004]). Whether to grant leave to amend a pleading is committed to the discretion of the court (see Thibeault v Palma, 266 AD2d 616, 617 [3d Dept 1999]).

As set forth above, the proposed amended claim asserts new causes of action for breach of contract relating to the same workers compensation policy as described in the original claim but arising out of a separate workers compensation insurance premium audit that was conducted over two years later. The original claim is based upon an insurance premium audit that occurred on November 2, 2012 and the proposed causes of action in the amended claim did not occur until after an audit conducted over two years later on January 23, 2015. As such, the allegations in the proposed amended claim would add new causes of action that would "impermissibly expand the scope of the original proceeding" (Matter of Miller v Goord, 1 AD3d 647; see also Barnes v State of New York, UID No. 2017-038-527 [Ct Cl, DeBow, J., Mar. 28, 2017] and McRae v State of New York, UID No. 2016-018-709 [Ct Cl, Fitzpatrick, J., Mar. 24, 2016]).

As the new causes of action for breach of contract arise from facts not alleged in the original claim and from a distinct accrual date, they must independently meet the jurisdictional requirements of Court of Claims Act 10 (4), which provides that a claim for breach of contract over which jurisdiction has been conferred upon the court of claims, shall be filed and served upon the attorney general within six months after the accrual of such claim, unless the claimant shall within such time serve upon the attorney general a written notice of intention to file a claim therefore, in which event the claim shall be filed and served upon the attorney general within two years after such accrual. Herein, as the claimant did not serve a notice of intention to file a claim relating to the new causes of action, the new claims asserted in the proposed amended claim are also untimely as this motion to amend was not brought within six months of ay one of the three accrual dates, namely, January 23, 2015, September 28, 2015 and August 16, 2016. It has been held that the filing and service requirements of the Court of Claims Act are jurisdictional in nature and must be strictly construed (Finnerty v New York State Thruway Auth., 75 NY2d 721 [1989]). Accordingly, as claimant's proposed amended claim would impermissibly expand the original claim and the new causes of action were not timely asserted and are jurisdictionally defective, the cross-motion is denied.

Based upon the foregoing, it is hereby

ORDERED, that defendant's motion to dismiss the amended claim in lieu of an answer is granted and the amended claim is dismissed; and it is hereby

ORDERED, that as the proposed claim would impermissibly expand the original claim and the new causes of action were not timely asserted and are jurisdictionally defective, the claimant's cross-motion is denied.

October 3, 2017

Buffalo, New York

J. DAVID SAMPSON

Judge of the Court of Claims

The following were read and considered by the Court:

1. Notice of Motion of Timothy J. Flynn, Esq, Assistant Attorney General dated June 26, 2017 with attached Exhibits A-C;

2. Affidavit in support of motion to dismiss of Timothy J. Flynn, Esq., Assistant Attorney General sworn to June 26, 2017;

3. Notice of Cross-Motion of Thomas B. Hughes, Esq., dated August 1, 2017;

4. Memorandum of Law of Thomas B. Hughes, Esq., dated August 1, 2017; and

5. Affirmation of Thomas B. Hughes, Esq., dated August 1, 2017 with attached Exhibits A-C;

6. Affidavit in support of motion to dismiss and in opposition to cross-motion of Timothy J. Flynn, Esq., Assistant Attorney General dated August 31, 2017;

7. Affirmation of Rebecca M. Kujawa, Esq., dated September 12, 2017;

8. Memorandum of Law of Rebecca M. Kujawa, Esq., dated September 12, 2017; and

9. Affidavit of Corey J. Hogan, dated September 12, 2017 with attached Exhibit A.