Matthew Isabella et al., Plaintiffs, Doris A. Hallock et al., Third-Party Respondents,v.Michael W. Koubek, Third-Party Appellant.BriefN.Y.February 18, 2014To be Argued By: Arthur J. Siegel Time Requested: 15 Minutes STATE OF NEW YORK COURT OF APPEALS MATTHEW ISABELLA AND MARY ISABELLA, HIS WIFE, Plaintiffs, v. DORIS A. HALLOCK AND PETER T. HALLOCK, Defendants/Third-Pasty Plaintiffs/Respondents v. MICHAEL W. KOUBEK, Third-Pasty Defendant/Appellant BRIEF FOR THIRD-PARTY DEFENDANT/APPELLANT MICHAEL W. KOUBEK Arthur J. Siegel, Esq. Bond, Schoeneck &King, PLLC Attorneys fog Michael W. Koubek 111 Washington Avenue Albany, NY 12210 Telephone: (518) 533-3000 TABLE OF CONTENTS Page No. TABLE OF AUTHORITIES ....................................................................................iii JURISDICTIONAL STATEMENT .......................................................................... 1 STATEMENT OF THE QUESTION INVOLVED ................................................. 1 STATEMENT OF THE NATURE OF THE CASE AND THE FACTS KNOWN TO DETERMINE THE QUESTION INVOLVED .................................................. 2 POINT I CINDER THE WORKERS' COMPENSATION LAW, ISABELLA'S EXCLUSIVE REMEDY AGAINST HIS CO- EMPLOYEE OLDENBORG CANNOT BE ENHANCED BY RECOVERY UNDER V&TL §388 AGAINST VEHICLE OWNER KOUBEK ........................................................................................... 5 A. The Statutory Framework ..................................................................... 5 B. District Court's Ruling That V&TL §338 Is Available To Defendant Hallock As A Defendant-Third Party Plaintiff Against Koubek ......... 7 C. The Exclusivity of Workers' Compensation Recovery Under Rauch v. Jones and Naso v. Lafata ...................................................................... 7 D. The Hallocks' Claims Are Derivative Of Isabella's Limited Claim Against Oldenborg And Are Thus Precluded ....................................... 8 E. Under Kenny v. Bacolo, A Third Party Claim Against An Owner Is Precluded When Workers' Compensation Is The Exclusive Remedy To Plaintiff .......................................................................................... 14 POINT II THE INTENT OF V&TL §388 IS STILL SERVED EVEN IF IT IS NOT APPLICABLE WHEN WORKERS' COMPENSATION BENEFITS HAVE BEEN PAID ..................................................... 17 POINT III THE CLAMP CASE, EXCLUSIVELY RELIED UPON BY DISTRICT COURT, WAS WRONGLY DECIDED AND MISCHARACTERIZED THE INTENT OF THE WORKERS' COMPENSATION LAW ................................................................ 21 A. The Absence Of An Employment Relationship Has No Bearing On Whether A Claim Under V&TL § 388 Can Be Commenced Against The Owner Of A Negligent Driver Co-Employee ............................. 21 B. The Clamp Court Failed To Consider That The Third Party Claim Against Koubek Was Not Based Upon Koubek's Active Negligence But Was Based Entirely Upon The Vicarious Liability Imposed By V&TL §388 .........................................................................................23 POINT IV THE EXCLUSIVE REMEDY PROVISIONS OF THE WORKERS' COMPENSATION LAW PROTECTING OLDENBORG PRECLUDE ANY DERIVATIVE CLAIMS BASED UPON HER NEGLIGENCE ................................................................................. 24 CONCLUSION ....................................................................................................... 27 ii TABLE OF AUTHORITIES CASES Allen v. Blum, Page No. 232 A.D. 2d 591 (2d Dept. 1996) ....................................................................... 21 Billy v. Consolidated Mach. Tool Cori 51 N.Y.2d 152 (1980) ........................................................................................ 12 Black v. Consolidated Frei h~ twa~Corp. of Delaware and Freeman Decorating Co•, 219 F. Supp. 2d 243 (E.D.N.Y. 2002) .......................................................... 12, 13 Christiansen v. Silver Lake Contracting Corp., 188 A.D. 2d 507 (2d Dept. 1992) ....................................................................... 21 Clamp v. Estate of Hales, 10 Misc. 3d 988 (N.Y. Sup. Ct. Greene 2005) ............................................passim Continental Auto Lease Corp. v Campbell, 19 N.Y.2d 350 (1967) ........................................................................................ 17 Hanover Ins. Co. v. Connor, 232 A.D. 2d 925 (3d Dept. 1996) .........................................................................6 Hassan v. Montuori, 99 N.Y. 2d 348 (2003) .........................................................................................6 Jaglall v. Supreme Petroleum Co. of New Jersey, Inc. 185 A.D.2d 971 (2d Dept. 1992) ........................................................................ 17 Kenny v. Bacolo, 61 N.Y. 2d 642 (1983) ................................................................................passim Mills v. Gabriel, 259 App. Div. 60 (2d Dept. 1940) ..................................................................... 18 Morris v. Snappy Car Rental, 84 N.Y. 2d 21 (1994) ...........................................................................................6 iii Musso v. Hsin~ Wei Chien, 2009 N.Y. Misc. LEXIS 4648 (N.Y. County 2009) ......................................... 21 Naso v. Lafata, 4 N.Y. 2d 585 (1958) ..................................................................................passim Nassau Roofing &Sheet Metal Co. v Facilities Dev. Corp., 71 N.Y. 2d 599) (1988) ...................................................................................... 23 Nelson v. Garcia 152 A.D.2d 22 (4t" Dept. 1989) .......................................................................... 19 Nunez v. Jenkins, 8 A.D. 3 d 151 (1st Dept. 2004) .......................................................................... 14 Oceanic Steam Nay. Co. v Compania Transatlantica Espanola, 134 N.Y. 461 (1892) .......................................................................................... 24 Plaumbo v. Ryan, 213 App. Div. 517 (2d Dept. 1925) ................................................................... 19 Psota v. Long Is. R. R. Co., 246 N. Y. 388 (1927) ......................................................................................... 19 Raquet v. Braun, 90 N.Y. 2d 177 (1997) ................................................................................. 23, 24 Rauch v. Jones, 4 N.Y. 2d 592 (1958) ................................................................................. passim Reich v. Manhattan Boiler &Equipment Cori., 91 N.Y.2d (1998) ......................................................................................... 12, 14 Rodriguez v. Lodato Rental, Inc. 267 A.D.2d 293 2d De t. 1999~ P ) ........................................................................ 17 Rose v. Gelco Corp. 261 A.D. 2d 381 (2d Dept. 1999) ................................................................. 17, 21 Sikora v. Keillor 13 N.Y.2d 610 (1963) ........................................................................................ 18 lv Szumowksi v. PV Holding Corp., 90 A.D. 3d 415 (1st Dept. 2011) ........................................................................ 14 Tikhonova v. Ford Motor Co. 10 A.D. 3d 185 (1st Dept. 2004) .................................................................. 19, 20 STATUTES 18 U.S.C. § 1364 ..................................................................................................... 20 22 NYCRR §500.27(a) .............................................................................................. 1 CPLR Article 14 ...................................................................................................... 23 CPLR § 1501 ............................................................................................................ 26 Fed. R. Civ. Pro. 54(b) .............................................................................................. 4 Federal Longshoremen's and Harbor Worker's Compensation Act 33 U.S.C.S. § 904 .............................................................................................. 15, 16 Federal Longshoremen's and Harbor Worker's Compensation Act 33 U.S.C.S. §905 ............................................................................................... 14, 16 General Municipal Law § 205-b ....................................................................... 18, 19 New York Vehicle &Traffic Law §388 ..........................................................passim New York Workers' Compensation Law .........................................................passim New York Workers' Compensation Law §29(6) .............................................passim Vehicle and Traffic Law, § 59 ............................................................................. 7, 10 Workers' Compensation Law § 11 ......................................................... 11, 14, 15, 16 OTHER AUTHORITIES New York Constitution, Article 6, § 3(b)(9) ............................................................. 1 v JURISDICTIONAL STATEMENT The basis for this Court's jurisdiction is the New York Constitution, Article 6, § 3(b) (9) and 22 NYCRR §500.27(a), which authorize this Court to accept certified questions from any United States Court of Appeals. By Decision dated August 13, 2013, the United States Court of Appeals for the Second Circuit ("the Second Circuit") certified the question, which is the subject of this appeal, to this Court. (A-4-17).2 On September 12, 2013, this Court accepted the certification of the question presented by the Second Circuit. (A-3). STATEMENT OF THE QUESTION INVOLVED The single question certified by the Second Circuit is whether Third-Party Defendant-Appellant Michael W. Koubek ("Koubek"), the non-employee owner of a vehicle driven by his wife, Roberta Oldenborg ("Oldenborg"), a co-employee of Plaintiff Matthew Isabella ("Isabella"), can be vicariously liable under New York Vehicle &Traffic Law §388 (V&TL) to Defendants-Third Party Plaintiffs- Respondents, Doris A. Hallock and Peter T. Hallock ("the Hallocks"), for injuries sustained as a result of Oldenborg's active negligence, despite the fact that Isabella ' New York Constitution, Article 6, § 3(b)(9) provides as follows: "The court of appeals shall adopt and from time to time may amend a rule to permit the court to answer questions of New York law certified to it by the Supreme Court of the United States, a court of appeals of the United States or an appellate court of last resort of another state, which may be determinative of the cause then pending in the certifying court and which in the opinion of the certifying court are not controlled by precedent in the decisions of the courts of New York." 2 "A" refers to the Appendix, submitted herewith. received Workers' Compensation benefits and that New York Workers' Compensation Law §29(6) was Isabella's exclusive remedy for the injuries he sustained as a result of any negligence on the part of his co-employee Oldenborg. On May 16, 2011 The United States District Court, Northern District of New York, Honorable Gary L. Sharpe, presiding, concluded that Koubek was vicariously liable under V&TL §388 to the Hallocks and granted them partial summary judgment. On July 5, 2012 Koubek appealed to the Second Circuit. On August 13, 2013 the Second Circuit determined that since there was no New York State case directly on point, the following question should be certified to the New York Court of Appeals: Whether a defendant may pursue a third-party contribution claim under New York Vehicle and Traffic Law §388 against the owner of a vehicle, where the vehicle driver's negligence was a substantial factor in causing the plaintiffs injuries, but the driver is protected from suit by the exclusive remedy provisions of New York Workers' Compensation Law §29 (6)? (A-16) STATEMENT OF THE NATURE OF THE CASE AND THE FACTS KNOWN TO DETERMINE THE QUESTION INVOLVED The facts relevant to the issue raised by the certified question are not in dispute. On November 27, 2007, in the early evening hours, Plaintiff Isabella was a passenger in a vehicle owned by Koubek and driven by Koubek's wife and co- employee of Isabella, Oldenborg. (A-38). Isabella and Oldenborg were traveling through New York State on their way home to New Jersey after performing an 2 audit in Massachusetts. (A-93-95). Isabella and Oldenborg were in the course of their employment for their mutual employer, Wachovia Securities. (A-85). Shortly after Oldenborg exited the New York Thruway at the Coxsackie exit, the Koubek Vehicle was involved in a collision with another vehicle driven by Doris Hallock and owned by her husband, Peter Hallock. (A-96-103). As a result, Isabella sustained physical injuries. (A-104, 130-132). Following the accident, Isabella, because he was injured in the course of his employment in a vehicle driven by his co-employee Oldenborg, collected workers' compensation benefits for his injuries. (A-131-133) On February 2, 2009, Isabella commenced an action against only The Hallocks in United States District Court for the Northern District of New York. (A-37-39). Isabella did not sue Oldenborg because Workers' Compensation Law §29(6) barred Isabella, a recipient of Workers' Compensation benefits, from suing his co-employee Oldenborg. On June 8, 2009, the Hallocks commenced athird-party action against Koubek for contribution and indemnification based, in part, upon Koubek's ownership of Oldenborg's vehicle pursuant to New York's automobile vicarious liability statute, V&TL §388. (A-31-36). The Hallocks sought contribution only in the event a judgment was rendered against theirs for Isabella's injuries. The 3 Hallocks did not seek compensation from anyone for any of their own injuries or damages which may have resulted from the motor vehicle accident. On January 27, 2010 Koubek moved for summary judgment, asserting that Oldenborg's immunity from suit under the Workers' Compensation Law extended to Koubek. Since Oldenborg's alleged negligence could not be imputed to Koubek, it was maintained by Koubek that he could not be found vicariously liable as owner of the vehicle driven by Oldenborg.3 (A-47) On May 16, 2011 the Honorable Gary L. Sharpe, Unites States District Court Judge, issued aMemorandum-Decision Order denying, in part, Koubek's motion for summary judgment, finding that Koubek could be vicariously liable for Ms. Oldenborg's negligence under V&TL X388. (A-18-22). On August 8, 2011 Koubek moved under Fed. R. Civ. Pro. 54(b) to revise District Court's Order to find that Koubek cannot be vicariously liable, as a matter of law, for Isabella's injuries or, in the alternative, to permit Koubek to file an interlocutory appeal to the Second Circuit on the issue. On October 28, 2011 District Court issued a text order denying Koubek's Rule 54(b) motion in its entirety. (A-23-24). ' Since the Hallocks and Isabella conceded that Koubek was not independently negligent for the collision, District Court granted Koubek's motion for summary judgment on The Hailocks' cause of action asserting active negligence against Koubek. As a result, the only remaining basis asserted for liability against Koubek is his purported vicarious liability under V &TL §388. (A- 47, 18-22). On June 8, 2012 a Settlement Agreement/Order was entered establishing the total monetary value of Isabella's injuries, but reserving payment until after a jury verdict apportioned relative culpability and the legal issue presented on this certification was resolved. On June 12, 2012 a jury verdict was entered apportioning 90% liability to Koubek as owner of Oldenborg's vehicle and 10% liability to the Hallocks. On June 12, 2012, District Court entered Final Judgment on the jury verdict. (A-25). On July 6, 2012 Koubek filed a Notice of Appeal of the final judgment with District Court. (A-28-29). On August 13, 2013, the Second Circuit, in a 14 page decision, certified the question to this Court as to whether the Hallocks can assert a vicarious liability contribution claim against vehicle owner Koubek under V&TL §388, despite the fact that Oldenborg, as the driver and co-employee of Plaintiff, is immune from suit under the Worker's Compensation Law. (A-4-17) POINT I UNDER THE WORKERS' COMPENSATION LAW, ISABELLA'S EXCLUSIVE REMEDY AGAINST HIS CO-EMPLOYEE OLDENBORG CANNOT BE ENHANCED BY RECOVERY UNDER V&TL $388 AGAINST VEHICLE OWNER KOUBEK A. The Statutory Framework The interplay of two New York Statutes is at issue here. The first is Workers' Compensation Law §29(6). This statute provides that "the right to 5 compensation... shall be the exclusive remedy to an employee when such employee is injured or killed by the negligence or wrong of another in the same employ." There is no dispute that Isabella's recovery against his co-employee Oldenborg is limited exclusively to benefits under the Workers' Compensation Law. There is also no question that Isabella in fact received these benefits from Isabella and Oldenborg's mutual employer, Wachovia Securities. (A-131-133). Isabella, recognizing the exclusivity of these benefits, and Oldenborg's absolute immunity from suit under the Workers' Compensation Law, did not commence a direct action against Oldenborg. The second statute is V&TL §388. This statute imposes liability on the owner of a vehicle for injuries sustained as the result of negligence in the use or operation of the vehicle by a permissive operator. The purpose of this statute is to ensure access by injured persons to a financially responsible party. Hassan v. Montuori, 99 N.Y. 2d 348 (2003) citing Morris v. Snappy Car Rental, 84 N.Y. 2d 21, 27 (1994); Hanover Ins. Co. v. Connor, 232 A.D. 2d 925, 927 (3d Dept. 1996). The Second Circuit confirmed New York precedent that Isabella could not use V&TL §388 to sue Koubek directly as the owner of the vehicle, because this would provide Isabella with a direct recovery greater than permitted under the Workers' Compensation Law. (A-18-22, 4-17). Rauch v. Jones, 4 N.Y. 2d 592. G7 B. District Court's Ruling That V&TL §338 Is Available To Defendant Hallock As A Defendant-Third Party Plaintiff Against Koubek District Court, departing from the principles and reasoning enunciated in Rauch and other decisions of this Court, held that Koubek could be vicariously liable as vehicle owner under V&TL §388 in a third-party action commenced by Hallock, despite Oldenborg's immunity from suit. (A-18-22). In support of this holding, District Court relied exclusively upon Clamp v. Estate of Hales, 10 Misc. 3d 988 (N.Y. Sup. Ct. Greene 2005), a case factually on all fours with the present case, but, as set forth below, wrongly decided. C. The Exclusivity of Workers' Compensation Recovery Under Rauch v. Jones and Naso v. Lafata This Court in Rauch v. Jones, 4 N.Y. Zd 592, 595 (1958) held that the Workers' Compensation Law is the exclusive remedy for a plaintiff injured by a co-employee in the course of their employment. The plaintiff in Rauch, a passenger in a vehicle driven by his co-employee, was injured in an automobile accident. Id. The plaintiff sued the owner of the vehicle who was neither the employer nor a co-employee of the plaintiff. Id. Plaintiff relied upon V&TL X59, the predecessor statute to V&TL §388, which imposed vicarious liability upon the owner of a vehicle for the negligence of the driver. This Court, in disallowing this action, concluded as follows: As the only negligence alleged in the amended complaint consists of negligent acts and omissions ascribed to the 7 operator of the vehicle, plaintiff clearly seeks to recover for injury caused solely "by the negligence or wrong of another in the same employ" and not because the defendant [owner] was a wrongdoer. This privilege is denied him by the compensation statute. Id. at 596. The Hallocks conceded, and District Court ruled, that the only basis for liability against Koubek derived from the vicarious liability imposed under V&TL §388. The Hallocks are not seeking recovery for any injuries sustained by them as a result of the accident. Rather, they are seeking contribution only in the event that they are found liable for Isabella's injuries. Therefore, like Rauch, it is the purported negligence of Oldenborg only, and not any "wrongdoing" by Koubek, that supports the Hallocks' claim. Whether a claim is asserted by Isabella or the Hallocks, the same negligent conduct, for which an exclusive remedy has already been provided, is being targeted. D. The Hallocks' Claims Are Derivative Of Isabella's Limited Claim Against Oldenbor~ And Are Thus Precluded The holding in Rauch should apply equally to the Hallocks as Defendants- Third-Party Plaintiffs, since the Hallocks' third party claims are wholly derivative of any claims that Isabella has against Oldenborg as well as Koubek. Moreover, the Hallocks' only surviving claim of liability against Koubek is not for Koubek's affirmative negligence but for being the owner of the vehicle and being passively and vicariously liable under V&TL §388. Although not faced with athird-party claim, this Court in Rauch recognized that any claim commenced against the owner where the exclusive recovery is Workers' Compensation Law is necessarily derivative and impermissible, because the underlying claim has been extinguished by operation of the Workers' Compensation Law: The Statute [Workers' Compensation Law] having deprived the injured employee of a right to maintain an action against a negligent co-employee, bars a derivative action which necessarily is dependent upon the same claim of negligence for which the exclusive remedy has been provided. Rauch, 4 N.Y. 2d at 596. This Court further interpreted the meaning of the Workers' Compensation Law and its interplay with the predecessor to V&TL §388 in Naso v. Lafata, 4 N.Y. 2d 585 (1958), decided the same day as Rauch. In that case, the plaintiff, a passenger in a vehicle driven by his co-employee, was injured due to the negligence of his co-employee. Id. at 587. The plaintiff collected Workers' Compensation benefits and then sued the owner of the vehicle. Id. This Court, in concluding that the Workers' Compensation Law precluded plaintiff from commencing an action, held as follows: No more unequivocal expression could have been used by the Legislature as indicative of an intendment on its part to limit to workmen's compensation the recovery available to an employee injured under the circumstances. Id. at 5 89. ~~ The Court rejected plaintiff's argument that the vicarious liability provision of V&TL §59 allowed plaintiff to assert an independent claim against the owner. The Court reasoned that since the employee-driver's liability is limited to Workers' Compensation payments, the owner should be precluded from bringing a contribution claim against the driver for any independent negligence. Id. at 590. This Court also considered the impact of allowing any claim against a negligent co-employee protected by the Workers' Compensation Law: Were we to allow plaintiff, under the present circumstances, to recover against the owner of the automobile, Lafata, Jr., then, under the rule set forth in the Taub and Gorham cases, Lafata, Jr., would be entitled to recovery over against plaintiffs fellow employee, Lafata, Sr., the negligent operator of the vehicle. Under such a holding the fellow employee would be afforded less than complete protection, and the legislative purpose in adopting subdivision 6 of section 29 of the Workmen's Compensation Law would, thereby, be thwarted. Thus the Legislature, with a view of freeing the fellow employee from liability under all circumstances, used the language it did and limited the injured employee's remedy to workmen's compensation. Id. at 591. This Court logically and equitably concluded that if the owner, who has no independent negligence other than what is imputed by statute, cannot seek contribution from the driver, the plaintiff should be precluded from initiating a claim against the owner, who could then receive a windfall from anon-negligent party with no recourse to the responsible party. 10 Similarly, if Koubek can be sued in a third-party action based solely on his vicarious liability but is prevented under Workers' Compensation Law §§ 11 and 29(6) from seeking contribution against Oldenborg for her negligence, Koubek will be denied any recourse against the party actually at fault. This is inequitable, works a severe hardship on Koubek, and is precisely why Koubek should be afforded the same protections from third-party suits as Oldenborg. Permitting an "end run" third-party action against Koubek solely on the basis of Oldenborg's negligence as imputed to him by virtue of V&TL §388 creates the potential for a statutorily iinperinissible windfall to Plaintiff, derives Koubek of his fundamental entitlement to contribution, and defeats the very purposes for which the Workers' Compensation limited liability statute was designed. While the Rauch case did not directly address athird-party claim against a vehicle owner, this Court in Rauch did hold that immunization from suit provided under the Workers' Compensation Law extends to an otherwise vicariously liable owner. Rauch, 4. N.Y. 2d at 595-96. As articulated by the Court in Rauch, the purpose of V&TL §388 is to: ...create a remedy for losses which an injured person had been subjected to in a class of cases where no right to relief exists. But where there is a specific remedy for a wrong, a derivative liability imposed by a statute does not attach inasmuch as provision for fu11 redress for the losses suffered as a consequence of the wrong had been made. Id. at 596 11 In the present case, compensation for Oldenborg's "wrong" is provided by the exclusivity provisions of the Workers' Compensation Law. Therefore, the derivative liability of Koubek, as an owner under V&TL §388, is also precluded. Id. This Court has applied the principle at issue here in Reich v. Manhattan Boiler &Equipment Corp., 91 N.Y.2d, 772 (1998). This Court, in reaffirming Rauch, disallowed indirect recovery by a plaintiff who attempted to "purchase" a defendant's contribution claim to avoid the limited remedy under the Workers' Compensation Law. Relying in part upon Rauch, this Court concluded that to permit this would enable an employee to do indirectly what he could not do directly. Id. at 781.4 The inequities of allowing a claim against the owner was also exposed in Black v. Consolidated Frei hg tways Corp. of Delaware and Freeman Decorating Co., 219 F. Supp. 2d 243 (E.D.N.Y. 2002). In that case, plaintiff was injured when he was directing a forklift onto a tractor trailer and fell through a hole in the trailer floor. The plaintiff was employed by defendant Freeman and defendant `' Similarly, in Billy v. Consolidated Mach. Tool Cori 51 N.Y.2d 152 (1980) this Court rejected the so-called "dual capacity" doctrine which permitted employees to sue their employers as property owners, thereby avoiding the exclusive remedy provisions of the Workers' Compensation Law. The Court, in rejecting this effort, held that "We would be seriously undermining the salutary social purposes underlying the existing workers' compensation scheme if we were to permit common-law recovery outside of that scheme on the basis of such illusory distinctions. Id. at 160. 12 Consolidated owned the trailer. Id. at 246. The plaintiff conceded that his negligence claim against his employer was barred by the Workers' Compensation statute, but pursued a claim, founded upon the employer's negligence, against Consolidated as owner under V&TL §388. Id. at 247-48. The Court found as follows: If Black is permitted to proceed against Consolidated because of the provisions of Vehicle and Traffic Law Section 388 he would be able to make an end-run around the exclusivity previsions of the Workers' Compensation statute and [he] might be able to recover twice for his injuries. Stated differently, even though Section 388 on its face permits any negligence by [the employer] to be imputed to [the owner], it would be improper to impute negligence to [the owner] ... because any negligence claim against [the employer] is barred by the Workers' Compensation Law and thus there is nothing to impute to [the owner]. Indeed, the purpose of the Workers' Compensation Law would be thwarted in this situation, because [the owner] could assert claims for contribution against [the employer] (which would not be barred by the Workers' Compensation Law), thereby allowing [the plaintiffs to recover from [the employer] indirectly. Id. at 247-48.5 — In a similar vein the Hallocks, and by extension Isabella, should not be able to defeat the exclusive remedy provisions of the Workers' Compensation Law by There is an additional inequity that could arise and defeat the exclusivity of Workers' Compensation benefits if a third party action was permitted. In the event that a judgment is rendered against a defendant without adequate resources to pay it, and a third party claim against the owner of the vehicle is permitted and succeeds, a plaintiff could recover additional moneys derived directly from the vehicle operator-co-employee, by virtue of the negligence imputed to the owner. As a result, the limited and exclusive remedy to the plaintiff from the co-employee would be improperly expanded beyond receipt of Workers' Compensation benefits. 13 essentially creating a second, impermissible basis of liability against Koubek as owner and Oldenborg as the statutorily insulated driver-co-employee. In the present case, the Hallocks' Third Party Complaint derives directly from Isabella's claim against Oldenborg, which is concededly precluded under the Workers' Compensation Law. Since Isabella's claims are precluded, the logic and public policy considerations underpinning this Court's decisions in Rauch, Naso and Reich require that the Hallocks' derivative and dependent claims against Koubek also be precluded. 6 E. Under Kennv v. Bacolo, A Third Party Claim Against An Owner Is Precluded When Workers' Compensation Is The Exclusive Remedy To Plaintiff This Court has already extended the principles enunciated in Rauch to third- party claims involving a statute almost identical to the one at issue. In Kenny v. Bacolo, 61 N.Y. 2d 642 (1983) this Court precluded a vicarious liability claim by a defendant-third-party plaintiff against a vehicle owner under the analogous Federal Longshoremen's and Harbor Worker's Compensation Act, which has nearly the same exclusivity language as contained in Workers' Compensation Law § 11.E 6 See also Szumowksi v. PV Holdin Corgi, 90 A.D. 3d 415 (1st Dept. 2011) (owner of vehicle not vicariously liable because plaintiff's exclusive remedy was Workers' Compensation); Nunez v. Jenkins, 8 A.D. 3d 151(lst Dept. 2004) (Workers' Compensation Law did not bar plaintiff from suing owner because plaintiff was suing owner for affirmative negligence rather than on a theory of vicarious liability). ' Federal Longshoremen's and Harbor Worker's Compensation Act 33 U.S.C.S. §905 states as follows: 14 In Kenny the plaintiff, a passenger in a van driven by his co-employee, was injured when the van collided with another vehicle. 61 N.Y. 2d at 643. The plaintiff sued the driver of the other vehicle who, in turn, commenced athird-party action against the driver of the van. Id. This Court held that because the driver of the van was statutorily immune from suit, no liability could be imputed to the owner of the van and no action could be sustained against the owner: It was also proper to dismiss the third-party complaint as to Bacolo and Decker Tank &Equipment Company. As plaintiff's co-employee, Bacolo is immune from any suit for contribution based upon injuries he may have caused to Plaintiff. (citations omitted) Decker Tank was sued, as the owner of the leased truck, on the theory that it was vicariously liable for the driver's negligence. Inasmuch as the driver, Bacolo, is statutorily immune from suit, there can be no liability imputed to Decker Tank and no action can be sustained against it. (citing Rauch sup~a.)(other citations omitted) Id. at 645. The liability of an employer prescribed in section 4 (33 USCS § 904) shall be exclusive and in place of all other liability of such employer to the employee, his legal representative, husband or wife, parents, dependents, next of kin, and anyone otherwise entitled to recover damages from such employer at law or in admiralty on account of such injury or death. New York Workers' Compensation Law § 11 states as follows: The liability of an employer prescribed by the last preceding section shall be exclusive and in place of any other liability whatsoever, to such employee, his or her personal representatives, spouse, parents, dependents, distributees, or any person otherwise entitled to recover damages, contribution or indemnity, at common law or otherwise, on account of such injury or death or liability arising therefrom. 15 This factual scenario is virtually identical to the one presented on this appeal and compels the conclusion that the Hallocks should not be permitted to assert claims against Koubek that are not available to Isabella. Although Kennv addresses the exclusive remedy under Federal Longshoremen's and Harbor Worker's Compensation Act, this holding applies equally to New York Workers' Compensation Law. The Kennv Court cited Rauch in support of its conclusion that the third party claim is precluded. Id. ~ The Hallocks also unsuccessfully attempt to distinguish the Kenny case by pointing out that the vehicle owner in Kenny leased the vehicle to the employer, whereas Koubek loaned his personal vehicle to his wife. However, in both Kenny and the case at bar, the injured party was a passenger in a vehicle being operated by a co-employee. In both cases, the owner of the vehicle being operated by the co-employee was unrelated to any of the parties by employment. The Hallocks have failed to articulate a single reason why this distinction makes the holding in Kenny any less applicable to the present case. ° The Second Circuit, in its decision certifying the question before this Court, stated in a footnote that "...in Kennv the exclusive remedy provision of the Longshoremen's and Harbor Workers' Compensation Act virtually mirrors the analogous provisions in sections 11 and 29(6): `The liability of an employer prescribed in Section 904 of this title shall be the exclusive and in place of all other liability of such employer to the employee...33 U.S.C. § 905(a). (A-11). The Second Circuit, in addressing Hallocks' argument that Kennv should not apply because it applies a different statute, indicated that any differences are not material because the statutes ̀ are similar in every relevant way" and Kennv "cited state workers' compensation cases in support of its analysis." (A-12) 16 For these reasons, this Court, consistent with Rauch, Naso, and Kenny should preclude the Hallocks from initiating its third-party cause of action against Koubek. POINT II THE INTENT OF V&TL §388 IS STILL SERVED EVEN IF IT IS NOT APPLICABLE WHEN WORKERS' COMPENSATION BENEFITS HAVE BEEN PAID V&TL §388 was enacted to make certain that financially responsible parties are available to compensate plaintiffs in motor vehicle accidents. By creating liability against the owner, insurance or financial resources are more likely to be available to pay any judgment. Continental Auto Lease Corp. v. Campbell, 19 N.Y.2d 350, 352 (1967). However, when an injured plaintiff, such as Isabella, is covered by another statute that provides absolute liability, financial recovery and an exclusive remedy, the protections under V&TL §388 become redundant and unnecessary. For instance, in Rodriguez v. Lodato Rental, Inc., 267 A.D.2d 293 (2d Dept. 1999), the rental company owner of a van could not be held vicariously liable under V&TL §388 because the driver was a co-employee of the plaintiff Again, in Ja~lall v. Supreme Petroleum Co. of New Jersey, Inc., 185 A.D.2d 971 (2d Dept. 1992), the owner of a vehicle could not be held vicariously liable to the plaintiff who was a co-employee of the driver of the vehicle. In Rose v. Gelco 17 Corp., 261 A.D. 2d 381, 382 (2d Dept. 1999), the Second Department found that the rental company owner of a vehicle in which plaintiff was injured could not be liable where the plaintiff could recover under Workers' Compensation from his employer. V&TL §388 has given way to other comprehensive compensation schemes in addition to Workers' Compensation. In Sikora v. Keillor 13 N.Y.2d 610 (1963), this Court, citing Rauch, held that V&TL §388 could not be used against the owner of a vehicle driven by a firefighter immune under General Municipal Law § 205-b. The Court articulated why V&TL §388 should not defeat the immunity afforded volunteer firefighters: In our opinion, the underlying purpose of the statutory exemption, viz., to encourage and facilitate volunteer firemen's service, will not be accomplished if the immunity from liability does not extend to the owner of the vehicle which was used by the fireman in the performance of his duty. But quite apart from such reason, in view of the derivative or secondary character of the owner's liability under section 388 of the Vehicle and Traffic Law (formerly Vehicle and Traffic Law, § 59), it logically follows that if no recovery can be had against the volunteer fireman, there is no right of action against the absent owner whose liability is purely statutory (cf. Naso v. Lafata, 4 N Y 2d 585; Rauch v. Jones, 4 N.Y. 2d at 596) Section 388 of the Vehicle and Traffic Law wrought a change in the common law by attributing the negligence of the operator to the owner of the motor vehicle being used with the owner's permission (Mills v. Gabriel, 259 App. Div. 60, 61 (2d Dep't 1940) aff d. 284 N. Y. 755). This statute was designed to prevent an owner, who had given permission for the use of his automobile, from escaping liability to injured persons by claiming that the automobile was not being used in his business. (Plaumbo v. Ryan, 213 App. Div. 517 (2d Dep't 1925). The owner of the vehicle is under no liability for the operator's negligence save that which is unposed on him by the provisions of the Vehicle and Traffic Law. Since the statute is in derogation of the common law, it "may not be presumed to make any innovation upon the common law further than is required by the mischief to be remedied." (Psota v. Long Is. R. R. Co., 246 N. Y. 388, 393 (1927). Id. at 7-8.9 For the same reasons, The Workers' Compensation Law, having provided a comprehensive and exclusive remedy for Isabella, and immunizing his co- employee, Oldenborg, from suit, should not be undermined by the vicarious liability imposed under V&TL §388. The case of Tikhonova v. Ford Motor Co. 10 A.D. 3d 185 (1st Dept. 2004) aff d 4 N.Y. 3d 621 (2005), cited by the Second Circuit, provides further support for Koubek's position. Although in that case this Court did apply V&TL §388 to insulate the owner of a vehicle driven by an individual protected by diplomatic immunity, it was specifically because there was no comprehensive statutory 9 Similarly, in Nelson v. Garcia 152 A.D.2d 22 (4~" Dept. 1989), the allegedly negligent driver in a multi-vehicle accident was a volunteer firefighter immune from suit under General Municipal Law § 205-b. All vicarious liability claims and third party claims under V&TL §388 brought against the owner of the ambulance driven by the firefighter were dismissed because the firefighter was immune from suit. The Court held that "The statute [V&TL §388] imposes vicarious liability, which by its very nature cannot be imposed upon the owner unless there is liability on the part of the driver. Thus, the immunity of the driver immunizes the owner against a claim of vicarious liability". Id. at 24. 19 scheme such as the Workers' Compensation Law to provide a recovery to the plaintiff As the Court stated: "In the present matter, there is no relevant statutory scheme providing for an exclusive remedy, nor is there any corresponding public policy concern." Id. at 191. This Court also distinguished both Rauch and Naso: Contrary to Ford's assertion, the basis for these decisions [Rauch and Naso] was not that derivative liability could never derive from an immune party's negligence. Rather, both decisions rest on the statutory language making plain that in the special context of workers' compensation, the system of remedies provided by the Workers' Compensation Law supplants all other statutory or common-law causes of action. The federal statute providing diplomats' tort victims with a direct action against the diplomats' insurance carriers contains nothing like the "exclusive remedy" clause specified in the Workers' Compensation Law (see 18 USC § 1364. Id. at 625. The Second Circuit acknowledged that the Court in Tikhonova distinguished Rauch and Naso, and that the statutory framework of the diplomatic immunity statute presented in Tikhonova did not contain an exclusive remedy like in the Workers' Compensation Law. However, in an excess of caution the Second Circuit would not "automatically conclude that derivative liability against an owner is barred merely because direct liability against the driver is statutorily prohibited." (A-14) 20 By distinguishing Rauch and Naso, This Court in Tikhonova reaffirmed that a party immune from suit under the Workers' Compensation Law is fully protected from vicarious claims of third parties under V&TL § 388. PnTNT TTT THE CLAMP CASE, EXCLUSIVELY RELIED UPON BY DISTRICT COURT, WAS WRONGLY DECIDED AND MISCHARACTERIZED THE INTENT OF THE WORKERS' COMPENSATION LAW District Court, in its decision denying summary judgment on the third-party claim against Koubek based upon V&TL §388, relied entirely on Clamp v. Estate of Hales, 10 Misc. 3d 988 (N.Y. Sup. Ct. Greene 2005). The Clamp Court, in analyzing the relationship between Workers' Compensation Law and V&TL §388, used flawed legal reasoning which should not form the basis for reversing established precedent by this Court. A. The Absence Of An Em~lovment Relationship Has No Bearing On Whether A Claim Under V&TL § 388 Can Be Commenced A a The Owner Of A Negligent Driver Co-Employee District Court agreed with the parties that Isabella, who had no employment relationship of any kind with Koubek, had no claim against Koubek under V&TL §388 because Isabella received Workers' Compensation benefits. (A-20).10 to See Rauch and Naso, supra. See Also Rose v. Gelco Corp., 261 A.D. 2d 381, 382 (2d Dept. 1999); Musso v. Hsing Wei Chien, 2009 N.Y. Misc. LEXIS 4648 * 5 (N.Y. County 2009) aff d 73 A.D. 3d 466 (1st Dept. 2010); Allen v. Blum, 232 A.D. 2d 591 (2d Dept. 1996); Christiansen v. Silver Lake Contracting Corgi, 188 A.D. 2d 507, 507-08 (2d Dept. 1992). 21 However, District Court then inexplicably adopted the Clamp Court's holding that there was "no evidence that the Workers' Compensation Law was intended to apply to actions between parties who are not related in any way by employment". (A-21). (Quoting Clamp, supra at 992.) This reasoning is logically inconsistent and unsound. Both the plaintiff and third-party plaintiff in Clamp and in the present case were "not in any way related by employment" to the vehicle owner. Nevertheless, the Clamp Court as well as District Court permitted the third-party plaintiff to assert a claim under V&TL §388 against the owner for the co-employee-driver's negligence, but prohibited the plaintiff from doing so. Both the Clamp and District Courts missed the point that it is not the employment relationship that controls whether the Hallocks can assert a vicarious liability claim against Koubek, as the owner of a vehicle driven by Oldenborg, the co-employee of Isabella. Rather, it is the status of Oldenborg as immune from suit, which includes any imputation of negligence to the owner of the vehicle. As this Court stated in Kenny: "Inasmuch as the driver, Bacolo, is statutorily immune from suit, there can be no liability imputed to Decker Tank [vehicle owner] and no action can be sustained against it." (citing Rauch, supra.) Kennv, supra at 645. 22 B. The Clamp Court Failed To Consider That The Third Party Claim Against Koubek Was Not Based Upon Koubek's Active Negligence But Was Based Entirel~pon The Vicarious Liability Imposed By V&TL X388 District Court also erroneously adopted, in the context of this V&TL §388 case, the Clainp Court's reasoning that a third party may seek contribution even if the plaintiff lacks the ability to do so. The Clamp Court supported this ruling by quoting Raquet v. Braun, 90 N.Y. 2d 177 (1997) that it is a "well-established principle that a defendant inay seek contribution from a third party even if the injured plaintiff has no direct right of recovery against that party, either because of a procedural bar or because of a substantive legal rule." Id. at 182. The holding in the Raquet case was misapplied by the Court in Clamp. In Raquet, this Court was called upon to decide whether to permit third-party claims by the owner and tenants of a building against contractors for their active negligence in contributing to a collapsed roof. In allowing these claims, the Court held that the "critical requirement" for apportionment by contribution under CPLR article 14 is that "the breach of duty by the contributing party must have had a part in causing or augmenting the injury for which contribution is sought." Id. at 183 uotin Nassau Roofing &Sheet Metal Co. v. Facilities Dev. Corp., 71 N.Y. 2d 599)(1988). In contrast, the sole basis for the Hallocks' contribution claim against Koubek is not that he was actively negligent, but that he was vicariously liable 23 under V&TL §338. District Court, rather than analyzing the line of cases addressing specifically the relationship between Workers Compensation Law and vicarious liability under V&TL §388, followed the mistaken lead of the Clamp Court and grafted a different, "active" basis of liability that arises from the principle that "everyone is responsible for the consequences of his own negligence, and if another person has been compelled...to pay the damages which ought to have been paid by the wrongdoer, they inay be recovered from him." Raquet, 90 N.Y. 2d at 183, u~ oting Oceanic Stearn Nay. Co. v Compania Transatlantica Espanola, 134 N.Y. 461, 468 (1892). Koubek, as the owner of the vehicle that caused Isabella injury, was found to be completely free of any active negligence. His liability, if any, derives solely from his ownership of a vehicle driven by an individual who is immune from suit because she provided, as a co-employee, an exclusive remedy for Isabella. On these undisputed facts, and given the legal precedent on this issue, the Hallocks' third party complaint should have been dismissed. POINT IV THE EXCLUSIVE REMEDY PROVISIONS OF THE WORKERS' COMPENSATION LAW PROTECTING OLDENBORG PRECLUDE ANY DERIVATIVE CLAIMS BASED UPON HER NEGLIGENCE The Hallocks argue that since they were not "solely" responsible for Isabella's injuries, and they share a portion of the fault, that they have the right to 24 commence athird-party action. However, this fact does not authorize the Hallocks to recover from Koubek for Oldenborg's negligence. The exclusive remedy provision of Workers' Compensation Law §29(6) provides that Workers' Compensation "shall be the exclusive remedy to an employee ...when such employee is injured or killed by the negligence or wrong of another in the same employ." The exclusiveness of the remedy as it applies to the employee is not defeated by the existence of another negligent party. Workers' Compensation is the sole remedy for a~ negligence of a co-employee. In a similar vein, the Hallocks contend that V&TL §388 is designed to prevent the "unfairness" of the Hallocks being 100% liable for Isabella's injuries despite the jury finding them only 10% at fault. This argument does not stand scrutiny since Oldenborg, the party found to be 90% negligent, already provided, through her employer, statutorily mandated Workers' Compensation benefits to Isabella for his injuries. The Hallocks also maintain that if they cannot assert a claim against Koubek, they become 100% liable for Isabella's injuries despite the fact that a jury found them only 10% at fault. Again, the Hallocks are invading upon the exclusiveness of the Workers' Compensation Law by attempting to include Oldenborg's percentage of fault imputed to Koubek, as part of the personal injury damages that, under Workers' Compensation, should not be paid to Isabella. 25 Simply stated, the Hallocks are liable to Isabella for their own negligence, and the Workers' Compensation Law provides the remedy to Isabella for Oldenborg's negligence, whether active or derivative. In addition, the exclusivity of the Workers' Compensation Law is not undermined by permitting Isabella to sue Hallock directly. Indeed, had Oldenborg been the owner as well as the driver of the vehicle, the Hallocks would have no recourse against Oidenborg, but would still remain potentially 100% liable for Isabella's injuries under New York's joint and several liability rules. See CPLR §1501. The Hallocks cannot circumvent the intent and effect of the Workers' Compensation Law by raising perceived inequities that exist by statute in our civil compensation system. 26 CONCLUSION Based upon the foregoing, Koubek respectfully requests an order answering the certified question posed to this court in the negative and concluding that a defendant may not pursue athird-party contribution claim under new York Vehicle and Traffic Law §388 against the owner of the vehicle, where the vehicle driver's negligence was a substantial factor in causing the plaintiff's injuries, but the driver is protected from suit by the exclusive remedy provisions of New York Workers' Compensation Law § 29(6). DATED: November 8, 2013 BOND, SCHOENECK &KING, PLLC Attorneys for Third-Party Defendant/Appellant Michael W. Koubek By: \~ Arthur .Siegel, Esq 111 Washington Avenue Albany, NY 12210 (518) 533-3000 siegela@,bsk.com 27