Opinion
# 2019-034-553 Claim No. 128336 Motion No. M-94166
05-05-2020
A.C., AS AN INFANT UNDER THE AGE OF 18 YEARS BY HER MOTHER AND NATURAL GUARDIAN, FATIME TRAORE, AND FATIME TRAORE INDIVIDUALLY v. STATE OF NEW YORK
NAPOLI SHKOLNIK, PLCC No Appearance HON. LETITIA JAMES New York State Attorney General BY: EDWARD J. CURTIS, JR., ESQ.
Synopsis
Declaratory judgment action dismissed for lack of jurisdiction; self-insured city is not an insurer for purposes of Court of Claims Act § 9 (9-a).
Case information
| UID: | 2019-034-553 |
| Claimant(s): | A.C., AS AN INFANT UNDER THE AGE OF 18 YEARS BY HER MOTHER AND NATURAL GUARDIAN, FATIME TRAORE, AND FATIME TRAORE INDIVIDUALLY |
| Claimant short name: | A.C. |
| Footnote (claimant name) : | |
| Defendant(s): | STATE OF NEW YORK |
| Footnote (defendant name) : | The Court has amended the caption to reflect the State of New York as the only proper Defendant. The New York State Office of Parks, Recreation and Historic Preservation is an office within the Executive Department of State government (see Parks, Recreation and Historic Preservation Law § 3.03), and thus lacks a corporate identity separate from the State. |
|---|---|
| Third-party claimant(s): | THE STATE OF NEW YORK |
| Third-party defendant(s): | THE CITY OF NEW YORK |
| Claim number(s): | 128336 |
| Motion number(s): | M-94166 |
| Cross-motion number(s): | |
| Judge: | MICHAEL E. HUDSON |
| Claimant's attorney: | NAPOLI SHKOLNIK, PLCC No Appearance |
| Defendant's attorney: | HON. LETITIA JAMES New York State Attorney General BY: EDWARD J. CURTIS, JR., ESQ. |
| Third-party defendant's attorney: | ZACHARY W. CARTER, ESQ. CORPORATION COUNSEL OF THE CITY OF NEW YORK BY: KENNETH S. SASMOR, ESQ. SENIOR COUNSEL |
| Signature date: | May 5, 2020 |
| City: | Buffalo |
| Comments: | |
| Official citation: | |
| Appellate results: | |
| See also (multicaptioned case) |
Decision
Third-party claimant State of New York seeks a judgment declaring that third-party defendant The City of New York is obligated to defend it in the underlying personal injury claim brought on behalf of A.C., an infant under the age of 18. Upon consideration, the Court will deny the State's motion, and instead will declare that the City is not an insurer for purposes of Court of Claims Act § 9 (9-a). The Court will otherwise dismiss the third-party claim for lack of jurisdiction.
The Court has reviewed the following documents:
1. Verified Claim, verified August 8, 2016, filed August 10, 2016, with attached exhibit;
2. Verified Answer, verified September 23, 2016, filed September 26, 2016;
3. Third Party Summons and Notice of Impleader, dated November 6, 2018, with attached Verified Third Party Claim, verified November 6, 2018, filed November 7, 2018, with attached exhibits;
4. Verified Answer to Third Party Claim, verified January 11, 2019, filed January 11, 2019;
5. Notice of Motion, dated June 20, 2019, filed June 20, 2019;
6. Affirmation in Support of Edward J. Curtis, Jr., dated June 20, 2019, with attached exhibits;
7. City's Affirmation in Opposition to the State's Motion for a Declaratory Judgment of Kenneth S. Sasmor, dated August 7, 2019, filed August 7, 2019, with attached exhibits;
8. Reply Affirmation of Edward J. Curtis, Jr., dated August 27, 2019, filed August 27, 2019.
Pursuant to a claim filed August 10, 2016 Claimant Fatime Traore seeks to recover for injuries that her infant daughter, A.C., allegedly sustained in a fall while ice skating at Riverbank State Park on May 21, 2015. At the time of the incident the infant was a student at a public school administered by the New York City Board of Education, and was using the skating rink as part of an organized school field trip to the park. The child allegedly slipped and fell as she skated, fracturing her left tibia. The claim urges negligence on the part of the State, which operated the park through its Office of Parks, Recreation and Historic Preservation (OPRHP).
At times in the submissions mistakenly identified as "Riverside State Park".
The State filed its answer on September 26, 2016. Subsequently, on November 7, 2018, the State filed a third-party summons and notice of interpleader, as well as a verified third-party claim, naming The City of New York (City) as a third-party defendant. The third-party claim requests a judgment under CPLR 3001 declaring that the City is an insurer pursuant to Court of Claims Act § 9 (9-a), and is required to defend and indemnify the State in the underlying action. The City filed its verified answer to the third-party claim on January 11, 2019.
Now before the Court is the State's motion seeking a judgment declaring that the City is required to defend it in the underlying claim. In support of the application the State has tendered sales receipts reflecting payments for the school's field trip, as well as a park use permit and insurance requirements sheet. The sales receipts each provide that "[a]ll Permitted Groups Are Required to Provide New York State Parks and Recreation with an Insurance Policy. Please Read the State Parks Insurance Requirements Flier" (Affirmation in Support of Edward J. Curtis, Jr., dated June 20, 2019 [Curtis affirmation], exhibit E [sales receipts], pp 1-2). The sales receipts reflect the school's payment of a $30 permit fee and $150 in admission fees for the students' use of the ice skating rink.
A one page document titled "Insurance Requirements Park Use Permit" is included with the sales receipts and park use permit (Curtis affirmation, exhibit E [Insurance Requirements Park Use Permit] p 3). The park use permit is signed by Paolo Benevento, who is identified as a teacher on the OPRHP Patron Incident Report (Curtis affirmation, exhibit G [Parks Department Patron Incident Report]). The park use permit Ms. Benevento signed provides that "I have read all the terms and conditions contained on both sides of the application and agree to comply with them. I understand that my organization and/or I will be held responsible for the terms and conditions of this permit" (Curtis affirmation, exhibit E, [park use permit] p 4). There is no mention of insurance on the park use permits, and it is unclear whether the Insurance Requirements Park Use Permit sheet was part of the permit form itself (Curtis affirmation, exhibit E, pp 4-5).
The Insurance Requirements Park Use Permit states that the permittee will defend the State and OPRHP "from all suits arising from the operation of this permit, or as a result of the consequences of any act, omission, neglect or misconduct on the part of anyone associated with the permittee on this project" (Curtis affirmation, exhibit E, p 3). That permit further compels the permittee to provide an insurance certificate in the amount of $1,000,000, with the State and OPRHP named as additional insureds on the permittee's insurance policy (id.). It is undisputed that the City did not secure the insurance coverage contemplated under the permit.
By letter dated May 10, 2017, the OPRHP asked the New York City Board of Education to defend and indemnify it in accordance with the Insurance Requirements Park Use Permit (Curtis affirmation, exhibit H [May 10, 2017 letter to New York City Board of Education from Parks Department Associate Counsel]). By letter dated June 30, 2017, the City of New York Law Department declined to defend or indemnify the State (Curtis affirmation, exhibit I [June 30, 2017 letter to OPRHP from City of New York Law Department]). This refusal led to the filing of the third-party claim, and the within motion by the State seeking a judgment declaring that the City is obligated to defend it in the underlying claim.
It is the State's position that Ms. Benevento, the teacher who signed the park use permit, thereby bound the City to defend the State from suits arising out of the operation of the permit. The State further asserts that the City is self-insured, and made its own voluntary decision to so act as part of its agreement to have its students travel to the ice rink for a group recreational activity. In opposing the State's motion the City argues inter alia that section 9 (9-a) applies only to insurers, and not self-insured governmental entities, and that, as such, this Court lacks jurisdiction to issue a declaratory judgment.
Under Court of Claims Act § 9 (9-a) the Court of Claims possesses the jurisdiction
"[t]o 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."
In urging that the City be deemed an insurer subject to the provisions of section 9 (9-a), the State cites Gutierrez v State of New York, UID No. 2006-029-605 (Ct Cl, Mignano, J., Dec. 19, 2006). In that matter a contractor, Compass Group USA, Inc. (Compass), had entered into a contract with the State in which it agreed inter alia to defend and indemnify the State against claims of liability, and to obtain liability coverage in the minimum sum of one million dollars that named the State as an additional insured. Instead, however, Compass purchased insurance coverage with a self-insured retention in which it directly undertook the primary duty to defend and indemnify the State, with the insurer only providing excess coverage. An injured party later brought a negligence claim against the State, which in turn brought a third-party claim under section 9 (9-a) for declaratory relief against Compass and other contractors. In weighing Compass's duty to defend the State the Court of Claims held that Compass's self-insured retention under that liability policy rendered it the primary insurer for that coverage, and not simply a party that had contractually agreed to indemnify and defend the State. The court deemed Compass to have acted as an insurer within the meaning of section 9 (9-a), such that the court possessed the jurisdiction under that statute to address the merits of the requests for declaratory relief raised by the State, as well as a notice-related defense raised by Compass.
Unpublished decision and orders may be found on the Court's website at http://www.nycourts.gov/courts/nyscourtofclaims/.
Following further submission the Court of Claims declared pursuant to section 9 (9-a) that Compass owed no duty to defend the State in the primary litigation, based upon the State's breach of a duty to provide timely notice of the underlying incident (Gutierrez v State of New York, UID No. 2007-029-021 (Ct Cl, Mignano, J., Aug. 22, 2007, affd 58 AD3d 805 [2d Dept 2009]).
In contrast, it has long been recognized "that a contractor with a tort or contractual obligation to indemnify a defendant in this court is not an insurer withing the meaning of section 9 (9-a)" (Sangirardi v State of New York, 152 Misc 2d 423, 428 [Ct Cl 1991]). In so holding the Court of Claims (Weisberg, J.) noted that insurance is a specific type of indemnity contract, and observed that "[i]f 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'" (id. at 428). For that reason the court found that section 9 (9-a) did not afford it the jurisdiction to render a declaratory judgment addressing a contractor's obligation to defend the State in a related lawsuit filed in the Court of Claims.
In this instance, unlike Gutierrez, the contracting entity that is the subject of the declaratory judgment claim did not separately negotiate an obligation with an insurer to take on the primary duties of indemnification and defense anticipated in its agreement with the State. To the extent the City may have entered into an agreement to defend and indemnify the State, and to provide an insurance certificate naming the State and OPRHP as additional insureds under an insurance policy, no such insurance was obtained. Under Sangirardi the City would at most be an indemnitor that breached a duty to provide insurance coverage. While resulting remedies may well be available to the State, they do not extend to declaratory relief under section 9 (9-a), because the City is not an insurer.
The Court rejects the State's further argument that because the City is purportedly "self-insured" it should be deemed an insurer on that ground. In that regard Gutierrez recognized that circumstances exist in which an uninsured party to a liability claim would be deemed to be self-insured. Those circumstances, however, dealt with motor vehicle financial security obligations in lieu of insurance that directly arose from statute. Here the State cites no statutory authority for otherwise deeming an uninsured party to be an insurer.
Lastly, the Court has reviewed Consolidated Edison Co. of N.Y. v Liberty Mut., 193 Misc 2d 399 (Sup Ct NY Co 2002), which is cited within Gutierrez, and finds it instructive on the issue of whether the City can be deemed an insurer by reason of the absence of liability insurance coverage for the incident herein, or more generally. As stated by the court (id. at 401):
Self-insurance . . . has been defined as a representation by the self-insured entity that it has the financial means to pay any judgments against it. (citations omitted). That is, a self-insurer is not an insurer of anything other than its own ability to pay for damages for which it is legally responsible. (citations omitted).
Put somewhat differently, "self-insurance" does not qualify as "insurance" at all. It has even been held that "self-insurance" is the very antithesis of insurance, because "self-insurance" means the retention of the risk of loss by the one upon whom it is directly imposed by law or contract, whereas "insurance" is an agreement by means of which the insured shifts the risk of loss to an insurer. (citations omitted).
That analysis of the nature of self-insurance provides further support that the City's uninsured status in this instance, and apparent self-insured status more generally, renders it a potential indemnitor, but not an insurer.
Based upon the above, it is hereby
ORDERED, that the State's motion for a judgment declaring that the City is obligated to defend it in the underlying claim is denied. The Court instead declares that the City is not an insurer for purposes of Court of Claims Act § 9 (9-a), and otherwise dismisses the third-party claim for lack of jurisdiction. The primary claim remains pending before the Court.
May 5, 2020
Buffalo, New York
MICHAEL E. HUDSON
Judge of the Court of Claims