Arman v. Marx

• Citation: 381 N.Y.S.2d 592,85 Misc.2d 406
• Parties: Knar ARMAN and Krikor Arman, Plaintiffs, v. William MARX et al., Defendants.
• Decision Date: 09 February 1976
• Court: New York Supreme Court

Page 592

381 N.Y.S.2d 592

85 Misc.2d 406

Knar ARMAN and Krikor Arman, Plaintiffs, v. William MARX et al., Defendants.

Supreme Court, Onondaga County.

Feb. 9, 1976.

Alderman, Alderman, Samuels & Schepp, Syracuse, for plaintiffs.

Hancoc Estabrook, Ryan, Shove & Hust, Syracuse, for defendants Hunt.

Mackenzie, Smith, Lewis, Michell & Hughes, Syracuse, for defendant Marx.

DECISION

WILLIAM R. ROY, Justice.

This is a motion by the plaintiffs for an order pursuant to Section 1003 of the C.P.L.R. joining the defendant, Liberty Mutual Insurance Company, as a party defendant to this motion and for an order pursuant to Section 29 of the Workmen's Compensation Law apportioning reasonable and necessary expenditures, including attorney's fees incurred by the plaintiff in effecting a recovery in the above captioned action.

Plaintiffs effected settlement against the defendants, Marx and Hunt, in a claim for personal injuries in the amount of $7500.00. Although the motion papers make reference to the payment by the defendant, Liberty Mutual Insurance Company, of Workmen's Compensation benefits, in actuality, the defendant, Liberty Mutual Insurance Company, had a lien against the proceeds of the above settlement for disability benefits paid in the sum of $550.00. The court views the reference to Workmen's Compensation benefits as merely a technical error and will proceed to the determination of this motion based upon the applicable provisions of the Disability Benefits Provision of the Workmen's Compensation Law.

In the 1975 Session of the Legislature a bill was introduced to amend Section 227, subd. 1 of the Disability Benefits Provision of the Workmen's Compensation Law. The purpose of the amendment was to allow an apportionment of the reasonable and necessary expenditures, including attorneys' fees, incurred in effecting a recovery in a third party action. The amendment to this section of the Workmen's Compensation Law was effective on the 10th day of June 1975. The third party action against the defendants, Marx and Hunt, was settled on the 9th day of September 1975, when releases were executed by the plaintiffs to the defendants, Marx and Hunt.

Plaintiffs contend, in this motion, that because of the amendment to Section 227 of the Workmen's Compensation Law, the defendant carrier, Liberty Mutual Insurance Company, is obligated to pay its share of the reasonable and necessary expenditures, including attorney's fees, in effecting the settlement. The defendant, Liberty Mutual Insurance Company, contends that the amendment to the statute in question does not apply retroactively to cases commenced prior to its enactment.

The Law Revision Commission in its recommendation to the Legislature pointed out several inequities in recommending the amendment to this section, as well as to Section 29 of the Workmen's Compensation Law. The Commission pointed out that under the law prior to the amendment, provision was made whereby a carrier which commenced an action under Section 29 or Section 227 of the Workmen's Compensation Law would be entitled to deduct one-third of the recovery or settlement over and above its lien to compensate it for attorneys' fees. The Commission further pointed out that these provisions were enacted to encourage carriers to commence third party actions where those receiving Workmen's Compensation or disability benefits failed to do so. It was with a view toward fairness that the Commission recommended the changes in Sections 29 and 227 of the Workmen's Compensation Law subsequently enacted by the Legislature.

The pertinent portions of the amendment to Section 227 of the Workmen's Compensation Law provided as follows:

'1 . . . Should the employee (receive an offer of settlement or) secure a recovery from such third party, whether by judgment, settlement, or otherwise, such employee may apply on notice to such lienor to the court in which a third party action was instituted, or to a court of competent jurisdiction if no action was instituted, for an order apportioning the reasonable and necessary expenditures, including attorneys' fees, incurred in effecting such recovery. Such expenditures shall be equitably apportioned by the court between the employee and the lienor.'

It is significant to note that the amended provision took effect on the 10th day of June 1975. This was the date on which the governor signed the bill into law. There were no delay provisions in the amendments to the above sections and the...