Opinion
Index No. 453233/2021 Motion Seq. No. 001
07-07-2022
THE NEW YORK BLACK CAR OPERATORS INJURY COMPENSATION FUND INC, Plaintiff, v. SILER & INGBER LLP, CHRISTOPHER BAPTISTE, RONALD INGBER Defendant.
Unpublished Opinion
MOTION DATE 01/07/2022
PRESENT: HON. DAVID B. COHEN, Justice
DECISION + ORDER ON MOTION
DAVID B. COHEN, J.S.C.
The following e-filed documents, listed by NYSCEF document number (Motion 001) 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19,20,21,22,23,24,25,27,28,29,30,31,32 were read on this motion to/for DISMISS.
In the instant action, defendants Siler & Ingber LLP, Christopher Baptiste, and Ronald Ingber move, pursuant to CPLR 3211(a)(7), for, inter alia, an order dismissing the complaint for failure to state a cause of action (motion seq. No. 001). Plaintiff The New York Black Car Operators' Injury Compensation Fund Inc., cross-moves, pursuant to CPLR 3212, for summary judgment against defendants, seeking to recover a sum of $11,972.23, plus interest, and a statutory collection fee of $2,633.89. After consideration of the parties' contentions, as well as a review of the relevant statutes and case law, defendants' motion to dismiss and plaintiffs cross motion for summary judgment are decided as follows.
Factual and Procedural Background
In May 2018, defendant Christopher Baptiste ("Baptiste") was injured in a motor vehicle accident during the course of his employment (Doc No. 1 at 3-4). As a result, Baptiste submitted a workers' compensation claim to the Workers' Compensation Board, seeking reimbursement for lost wages and medical treatment costs (Doc No. 1 at 5). Plaintiff, a not-for-profit corporation established under Executive Law § 160-DD and the workers' compensation carrier for Baptiste's employer, covered the claim and paid Baptiste a total of $11,972.23 (Doc No. 1 at 5). Baptiste then retained defendants Ronald D. Ingber and Siler & Ingber LLP to initiate a negligence action against Shane Davis ("Davis") and Ahmed Shougare ("Shougare") - two individuals who were allegedly negligent or caused the May 2018 accident ("the negligence action") (Doc No. 1 at 6; Doc No. 8 at 1). Thereafter, defendants discontinued the negligence action after settling it with Safe Auto Insurance Company, Davis' insurance carrier, which tendered its policy limit of $15,000 (Doc No. 1 at 6-7; Doc No. 10 at 1), making payment to defendants herein on February 25,2019.
In September 2021, plaintiff commenced the captioned action asserting that it had a lien on the proceeds of the settlement defendants obtained in the negligence action (Doc No. 1). Plaintiff sought to recover the $11,972.23 it previously paid to cover Baptiste's workers' compensation claim, plus interest (Doc No. 1 at 7-11). Plaintiff also sought to recover a collection fee of $2,633.89 under State Finance Law ("SFL") § 18 (Doc No. 1 at 11), which allows a state agency to collect an additional fee when a debtor fails to repay a debt owed to such agency.
Defendants now move, pursuant to CPLR 3211(a)(7), for an order: (1) dismissing the complaint for failure to state a cause of action, (2) compelling plaintiff to approve the settlement obtained by defendants in the negligence action, and (3) awarding them attorneys' fees in the amount of $2,500 (Doc No. 5). Plaintiff opposes the motion and cross-moves, pursuant to CPLR 3212, for an order granting summary judgment in its favor and awarding it the monetary sum it sought in its original complaint - $11,972.23, plus interest, and an additional $2,633.89 collection fee pursuant to SFL § 18 (Doc No. 13).
Legal Conclusions
Defendants' Motion to Dismiss
In reviewing a motion to dismiss for failure to state a cause of action, "the court must afford the pleading a liberal construction, accept all facts as alleged in the pleading to be true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory" (New York Hosp. Med Ctr. of Queens v Microtech Contr. Corp., 98 A.D.3d 1096, 1101 [2d Dept 2012], qffd22 NY3d 501 [2014]; see Leon v Martinez, 84 N.Y.2d 83, 87-88 [1994]). Importantly, "the criterion is whether the proponent of the pleading has a cause of action, not whether he [or she] has stated one" (High Definition MRI, P.C v Travelers Cos., Inc., 137 A.D.3d 602, 602 [1st Dept 2016] [internal quotation marks and citations omitted], see EBCI, Inc. v Goldman, Sachs & Co., 5 N.Y.3d 11, 19 [2005]).
Workers' Compensation Law ("WCL") § 29 generally allows a workers' compensation claimant to pursue an action against an alleged tortfeasor (see WCL § 29 [1]; Matter of Terranova v Lehr Constr. Co., 30 N.Y.3d 564, 567 [2017]). Yet, "[i]n the event that a claimant recovers in a third-party action, the compensation carrier is granted a lien on the amount of the recovery proceeds equal to the amount of past compensation it has paid, with interest" (Terranova, 30 N.Y.3d at 567, quoting Matter of Kelly v State Ins. Fund, 60 N.Y.2d 131,136 [1983]; see Matter of Djukanovic v Metropolitan Cleaning LLC, 194 A.D.3d 1275, 1277 [3d Dept 2021]). However, a workers' compensation carrier cannot impose a lien on the proceeds of any recovery obtained under Insurance Law § 5104(a) (see WCL § 29 [1-a]), a statute that prevents certain recoveries in actions brought by a "covered person against another covered person" (Insurance Law § 5104 [a]). A "covered person" is, among other things, an owner, operator, or occupant of a motor vehicle that has the appropriate insurance as required by the Vehicle and Traffic Law ("VTL") (see Insurance Law § 5102 [j]; VTL § 311; Hunter v OOIDA Risk Retention Group, Inc., 79 A.D.3d 1, 10-12 [2d Dept 2010]).
A review of the pleadings reveals that plaintiff successfully demonstrated that it has a viable cause of action under WCL § 29. In its complaint, plaintiff asserts that Baptiste was a workers' compensation claimant after a motor vehicle accident, that it covered his claim, and that it reimbursed him for lost wages and medical expenses (Doc No. 1 at 5). Plaintiff also asserts that defendants initiated the negligence action, which was subsequently discontinued after it was settled (Doc No. 1 at 6-7). According to plaintiff, the $15,000 settlement was paid by Davis' insurance carrier and represented the full limit of Davis' policy (Doc No. 1 at 6).
Accepting these facts as true, defendants' recovery cannot be classified as one "received pursuant to [Insurance Law § 5104(a)]" (WCL § 29 [1-a]), because the negligence action was not an action "by or on behalf of a covered person against another covered person" (Insurance Law § 5104 [a]). A "covered person" is an individual who satisfies the insurance requirements of VTL § 311, meaning he or she has an insurance policy providing at least $25,000 in liability coverage (see Insurance Law § 5102 [j]; VTL § 311 [4]). The maximum liability coverage under Davis' policy was only $15,000 - well below the $25,000 minimum amount of coverage required by VTL. Therefore, Davis was not a "covered person" and the negligence action was not the type covered by Insurance Law § 5104(a). Thus, defendants' recovery in that action is not protected by WCL § 29(1-a). Instead, defendants' recovery falls within the scope of WCL § 29(1), which allows for the imposition of a lien (see Terranova, 30 N.Y.3d at 567; Djukanovic, 194 A.D.3d at 1277). Therefore, plaintiff has a viable cause of action asserting a lien on the proceeds of defendants' settlement (see Continental Indem. Co. v Redzematovic, ___ A.D.3d ___, 2022 NY Slip Op 03866, *1 [1st Dept 2022]).
Contrary to its contentions, however, plaintiff is not entitled to a collection fee under SFL § 18. "That statute authorizes a collection fee, not to exceed 22% of the outstanding debt," when a debtor has failed to make payment within 90 days of receiving a bill from a state agency (New York State Thruway Auth. v Allied Waste Servs. of N. Am., LLC, 143 A.D.3d 1145, 1146-1147 [3d Dept 2016]; see SFL § 18 [5]). The debt, however, must be liquidated, meaning that it "has been determined to be due" (Lawyers' Fund for Client Protection of State of N.Y.v Gateway State Bank, 239 A.D.2d 826, 828 [3d Dept 1997], Iv dismissed 91 N.Y.2d 848 [1997]; see SFL § 18 [1]; New York State Thruway Auth., 143 A.D.3d at 1147). Thus, a debt is unliquidated until a judgment is entered on it (see Lawyers' Fund for Client Protection of State of N.Y.v Bank Leumi Trust Co. of N.Y., 256 A.D.2d 836, 838 [3d Dept 1998], aff'd 94 N.Y.2d 398 [2000]). Here, there is no evidence that plaintiff has provided defendants with an invoice or notice as required by the statute (see SFL § 18 [5]). Further, there is no judgment declaring that the debt is due - that is the purpose of the captioned action. Therefore, the debt is unliquidated and plaintiff is not entitled to the 22% collection fee under the statute (see Gateway State Bank, 239 A.D.2d at 828).
Last, defendants request for an order compelling plaintiff to consent to the settlement in the negligence action is without merit. "[A] claimant settling a third-party action must either obtain written approval of the settlement from the payor of workers' compensation benefits or seek a compromise order from the court in which the third-party action is pending" (Merrill v Moultrie, 166 A.D.2d 392, 392 [1st Dept 1990], Iv denied 77 N.Y.2d 804 [1991]; see WCL § 29 [5]). Here, plaintiff has not consented to the settlement and, further, defendants seek a compromise order in the wrong forum, since the negligence action was commenced in Kings County, not in New York County. Thus, defendants request for an order compelling plaintiff to consent to the settlement is denied (see Matter of Urig v Cigna Prop. & Cas. Cos., 209 A.D.2d 626, 626-627 [2d Dept 1994]).
Plaintiff's Cross Motion for Summary Judgment
To be awarded summary judgment, plaintiff must first "make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v Prospect Hosp., 68 N.Y.2d 320, 324 [1986]). If plaintiff satisfies its burden, the burden shifts to defendants to demonstrate the existence of material, triable questions of facts (see id). Plaintiff has satisfied its initial burden because it demonstrated that, pursuant to WCL § 29, it was entitled to a lien on the proceeds of defendants' settlement in the negligence action. Plaintiff established that it compensated Baptiste by paying his workers' compensation claim, that defendants initiated the negligence action and obtained a recovery in the form of a settlement, and that the recovery was not of the kind protected by WCL § 29(1-a) and Insurance Law § 5104(a). The proceeds from the settlement, therefore, fall into the category of proceeds covered by WCL § 29(1), thereby entitling plaintiff to a lien on those proceeds and to recover an amount equal to the compensation it paid previously, plus interest (see Continental Indem. Co., 2022 NY Slip Op 03866, *1). Thus, the burden shifts to defendants to demonstrate the existence of material, triable questions of fact. Defendants fail to satisfy their burden, since their argument simply reiterates their position that WCL § 29(1-a) does apply to the facts of this case.
However, plaintiff has not established that it is entitled to judgment as a matter of law on its claim for an additional collection fee under SFL § 18. As stated above, to be awarded a collection fee under the statute, there must be a liquidated debt. Here, there is no such liquidated debt; plaintiff "merely has an inchoate claim" to a lien on the proceeds from defendants' settlement in the negligence action (Gateway State Bank, 239 A.D.2d at 828). Because a collection fee cannot be awarded without a liquidated debt, plaintiff has not demonstrated that it is entitled to one. This Court has considered the parties' remaining contentions, which are either without merit or need not be addressed given the findings set forth above.
Accordingly, it is hereby:
ORDERED that defendants' motion to dismiss is granted to the extent that the portion of plaintiffs complaint seeking a collection fee under SFL § 18 is dismissed, and the motion is otherwise denied; and it is further
ORDERED that plaintiffs cross motion for summary judgment is granted to the extent that plaintiff is entitled to a lien on the proceeds of the settlement from defendants' action against Davis and Shougare, and the cross-motion is otherwise denied; and it is further
ORDERED that the Clerk is directed to enter judgment in favor of plaintiff and against defendants, jointly and severally, in the amount of $11,972.23, with interest thereon at the statutory rate from February 25, 2019.