Comm'rs of the State Ins. Fund v. Thupten Gyeltsen, Vogel & Rosenberg, Donald B. Rosenberg, Well-Come Holdings LLC, Index No.: 450121/2014

• Decision Date: 02 February 2015
• Docket Number: Index No.: 450121/2014
• Citation: 2015 NY Slip Op 30164 (U)
• Parties: COMMISSIONERS OF THE STATE INSURANCE FUND, Plaintiffs, v. THUPTEN GYELTSEN, VOGEL & ROSENBERG, DONALD B. ROSENBERG, WELL-COME HOLDINGS LLC, FLINTLOCK CONSTRUCTION SERVICES LLC, and ARCH INSURANCE COMPANY, Defendants.
• Court: New York Supreme Court

2015 NY Slip Op 30164(U)

COMMISSIONERS OF THE STATE INSURANCE FUND, Plaintiffs,
v.
THUPTEN GYELTSEN, VOGEL & ROSENBERG, DONALD B. ROSENBERG,
WELL-COME HOLDINGS LLC, FLINTLOCK CONSTRUCTION SERVICES LLC,
and ARCH INSURANCE COMPANY, Defendants.

Index No.: 450121/2014

SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK: PART 63

February 2, 2015

Mot.Date: Oct.15, 2014
Motion Seq.: 001

DECISION AND ORDER

For Plaintiffs:
Mark Slotkin, Esq.
199 Church Street
New York, New York 10007
212-312-7256

For Defendant Arch Insurance:
Goldberg Segalla LLP
By Michael T. Glascott, Esq.
665 Main Street, Suite 400
Buffalo, New York 14203
716-566-5400

Papers Considered in Review of Motion to Dismiss and Cross-Motion for Summary Judgment:

Notice of Motion with Attached Exhibits	1
Notice of Cross-Motion and Affirmation in Opposition	2
Reply Affirmation in Support of Motion to Dismiss	3
Reply Affirmation is Support of Cross-Motion	4

Ellen M. Coin, A.J.S.C.

Defendant Arch Specialty Insurance Company, named in this action as Arch Insurance Company, (hereinafter "Arch") brings a pre-answer motion pursuant to CPLR 3211(a)(1), (5) and (7) to dismiss the complaint. Plaintiff cross-moves pursuant to CPLR 3212 for summary judgment on its complaint.

Plaintiff filed this action to assert a statutory lien under Workers' Compensation Law §29(1) in the amount of $108,022.73 against the settlement payment defendant Thupten

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Gyeltsen received in the action entitled Thupten Gyeltsen v Well-Come Holdings, LLC et al., filed in New York State Supreme Court, New York County, Index No. 116102/2007. The underlying action arose from a physical injury Gyeltsen sustained in an accident at a construction site on September 30, 2005. The action was fully settled on January 17, 2011 upon payment by Arch to Gyelsten of $500,000.00. By the time of the settlement, plaintiff had allegedly paid Gyelsten worker's compensation benefits for lost wages in the amount of $83,584.00 and medical treatment in the amount of $24,438.73, arising out of the same injuries that were the subject of the action.

Workers Compensation Law §29(1) states in relevant part as follows:

If an employee entitled to compensation under this chapter be injured or killed by the negligence or wrong of another not in the same employ, such injured employee, or in case of death, his dependents, need not elect whether to take compensation and medical benefits under this chapter or to pursue his remedy against such other but may take such compensation and medical benefits and at any time either prior thereto or within six months after the awarding of compensation. . . pursue his remedy against such other subject to the provisions of this chapter . . . In such case, the state insurance fund, if compensation be payable therefrom, and otherwise the person, association, corporation or insurance carrier liable for the payment of such compensation, as the case may be, shall have a lien on the proceeds of any recovery from such other, whether by judgment, settlement or otherwise, after the deduction of the reasonable and necessary expenditures, including attorney's fees, incurred in effecting such recovery, to the extent of the total amount of compensation awarded

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under or provided or estimated by this chapter for such case and the expenses for medical treatment paid or to be paid by it and to such extent such recovery shall be deemed for the benefit of such fund, person, association, corporation or carrier. . . (emphasis added)

Arch argues that the phrase "recovery from such other" implicitly limits the enforcement of the lien solely as against the negligent tortfeasor who caused the employee's injury. As a third-party liability insurer, Arch was not a party to the underlying action, hence not a tortfeasor, and was not in privity with Gyeltsen. Further, Arch argues that the indemnification clause in the unlimited release it obtained from Gyeltsen in the underlying action insulates it from any claim of lien asserted by Gyetsen's lienholders, including for paid worker's compensation benefits.

In opposition, Plaintiff argues that the phrase "recovery from such other" in no sense implies, let alone expresses, the meaning that Arch attributes to it.

"[T]he reference to a lien on a "recovery from such other' is a simple but necessary statement that the workers' compensation lien should only apply in a suit against a third-party based on the same injury for which basic compensation benefits were paid to the worker. Everyone understands that that should be so, but as an ordinary matter of statutory drafting it is still necessary to say so, and that is what these words say"

(Reply Affirmation of Mark Slotkin, dated July 30, 2014, ¶9).

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Analysis

On a motion to dismiss pursuant to CPLR 3211, the court must accept as true the facts as alleged in the...