Fung v. Japan Airlines Co., Ltd.

• Decision Date: 13 December 2007
• Docket Number: 172.
• Citation: 850 N.Y.S.2d 359,9 N.Y.3d 351,880 N.E.2d 845
• Parties: Brent F. FUNG et al., Appellants, v. JAPAN AIRLINES COMPANY, LTD., et al., Defendants, and Japan Airlines Management Corp., Respondent. (And Third-Party Actions.) Brent F. Fung et al., Appellants, v. Aero Snow Removal Corp., Respondent.
• Court: New York Court of Appeals Court of Appeals

880 N.E.2d 845

9 N.Y.3d 351

850 N.Y.S.2d 359

Brent F. FUNG et al., Appellants, v. JAPAN AIRLINES COMPANY, LTD., et al., Defendants, and Japan Airlines Management Corp., Respondent. (And Third-Party Actions.)

Brent F. Fung et al., Appellants, v. Aero Snow Removal Corp., Respondent.

172.

Court of Appeals of New York.

December 13, 2007.

Pollack, Pollack, Isaac & DeCicco, New York City (Brian J. Isaac of counsel), and Edelman, Krasin & Jaye, PLLC (Paul Edelman and Lawrence Krasin of counsel), for appellants.

Brown Gavalas & Fromm LLP, New York City (David H. Fromm, Robert J. Brown and Fred G. Wexler of counsel), for Aero Snow Removal Corp., respondent.

Polin, Frisco & Villafane, Glen Cove (Andrew D. Polin of counsel), for Japan Airlines Management Corp., respondent.

OPINION OF THE COURT

JONES, J.

In this consolidated negligence action, we are required to consider the relationship between the exclusive remedy provisions of Workers' Compensation Law §§ 11 and 29(6), and principles of agency. Specifically, we are asked whether Japan Airlines Management Corp. (JAMC), as the Port Authority of New York and New Jersey's (Port Authority) putative managing agent, may benefit from the exclusive remedy defense in an action by plaintiff Brent Fung, a Port Authority employee, against JAMC. In a related action, Fung seeks to recover damages against Aero Snow Removal Corp. arising out of the same alleged injuries.

I. Facts and Procedural History

Plaintiff Brent Fung is employed by the Port Authority as an electrician. Plaintiff claims that at approximately 6:00 A.M. on January 22, 2001, he slipped and fell on a patch of ice shortly after arriving in the parking lot of Building 14 at John F. Kennedy International Airport and that he sustained back injuries requiring surgery, for which he began collecting workers' compensation payments a year later. The Port Authority owned the Building 14 premises, which it leased to JAMC. JAMC simultaneously subleased 70% of the premises—which encompasses the subject parking lot—back to the Port Authority. The lease/sublease declared that "[t]his Agreement does not constitute [JAMC] as the agent or representative of the Port Authority for any purpose whatsoever," and that "[n]either a partnership nor any joint []venture" is created. This statement of the parties' relationship is repeated elsewhere in the lease.

The lease obligated JAMC to contract with other entities for snow removal and electrical lighting work for the entire premises, among other maintenance responsibilities. Pursuant to the lease, JAMC contracted with Aero to commence "push and pile" snow removal operations when one inch of snow accumulated. Further, Aero would provide "ice/snow control" services—such as salting or sanding—at JAMC's request. Finally, the contract provided that JAMC was to release Aero upon the satisfactory completion of the snow removal. The Port Authority and JAMC share maintenance expenses on a 70%/30% basis.

In 2002, Fung, and his wife suing derivatively (plaintiffs), commenced a negligence action against JAMC, among others (Action No. 1). JAMC subsequently commenced a third-party action against Aero and a fourth-party action against the Port Authority, each for common-law and contractual indemnification. Plaintiffs thereafter commenced a separate negligence action against Aero (Action No. 2). At his examination before trial, Fung testified that he did not notice any snow on top of or near the ice patch after he fell, nor did he know for how long the ice patch existed. Moreover, Fung testified that he had complained to his supervisor about poor or inadequate lighting in the parking lot.

JAMC's representatives also testified. Rudolph Auslander, JAMC's president, indicated that he signed the snow removal contract with Aero on behalf of JAMC as "the agent for [the] Port Authority." JAMC's signature line on its contract with Aero says that JAMC acted "As Agents [sic] for the Port Authority." Sameer Sikander, a facilities manager at JAMC, testified as to the snowstorm that occurred during the two days preceding Fung's accident, January 20 and 21, 2001. Relying on his "snow logs" created during the storm, Sikander testified that salting of the Building 14 parking lot occurred between 10:30 P.M. on January 20 and 1:30 A.M. on January 21, but that subsequent salting may have taken place. He further testified that heavy snow fell in the early morning hours of January 21 and that snow clearing operations began around 3:00 A.M. and continued into the afternoon. Further, Aero's operations manager, Josep Boccio, testified that the JAMC/Aero contract did not require Aero to affirmatively salt or sand any area; that, based on Aero's records, all of Aero's work concerning the snow storm in question occurred on January 21, between 12:30 A.M. and 3:15 P.M., a day before Fung's accident; and that Aero did not sand or salt the parking lot on January 21.

Following discovery, JAMC moved for summary judgment dismissing the complaint and all cross claims asserted against it. JAMC argued that, as the Port Authority's agent responsible for maintenance of the parking lot and lighting fixtures, it was immune from liability under the exclusive remedy provisions of the Workers' Compensation Law. Additionally, JAMC argued that, in any event, it did not have actual or constructive notice of the alleged ice patch or of the parking lot's allegedly poor lighting.

Aero subsequently moved for summary judgment dismissing JAMC's third-party complaint against it in Action No. 1 and separately moved for summary judgment dismissing plaintiffs' complaint in Action No. 2. Further, the Port Authority moved for summary judgment dismissing JAMC's fourth-party complaint against it in Action No. 1, and JAMC cross-moved for the same relief on the second and third causes of action for contractual indemnification, apparently abandoning its common-law indemnification claim.

Supreme Court denied JAMC's and Aero's motions to dismiss plaintiffs* claims, and Aero's motion to dismiss JAMC's third-party complaint. Further, the court granted the Port Authority's motion to the extent of dismissing JAMC's common-law indemnification claim in the fourth-party complaint in Action No. 1, but denied its motion, and JAMC's cross motion, as to the contractual indemnification claim, noting that questions of fact existed as to JAMC's liability in the underlying personal injury action. The court rejected JAMC's exclusive remedy defense because JAMC and Fung's employer, the Port Authority, "are separate legal entities" with "separate income tax returns, separate budgets, and separate day-to-day control" even though they may have "some financial interrelation" (2005 N.Y. Slip Op 30132[U], *4, 2005 WL 5960544).

JAMC appealed from so much of Supreme Court's order as denied its motion for summary judgment dismissing the complaint in Action No. 1 and denied its cross motion for summary judgment on the contractual indemnification claim in its fourth-party complaint against the Port Authority. Aero cross-appealed from so much of Supreme Court's order as denied its motions for summary judgment dismissing JAMC's and plaintiffs' complaints against it.

The Appellate Division reversed Supreme Court's order, insofar as appealed from, granted JAMC's motion and dismissed the complaint and all cross claims asserted against it in Action No. 1, granted Aero's motion and dismissed the thirdparty complaint in Action No. 1 and the complaint in Action No. 2, and "severed" Action No. 1 "against the remaining defendants"^* (Fung v. Japan Airlines Co., Ltd., 31 A.D.3d 707, 707-708, 820 N.Y.S.2d 89 [2d Dept.2006] ). As to the injured plaintiff's underlying action against JAMC, the court relied on Seudath v. Mott, 202 A.D.2d 658, 609 N.Y.S.2d 319 (2d Dept. 1994), lv. dismissed 85 N.Y.2d 890, 626 N.Y.S.2d 754, 650 N.E.2d 412 (1995) and determined that because JAMC "was serving as the Port Authority's managing agent when the accident occurred, the plaintiffs' claims against [JAMC] are barred pursuant to the exclusivity provisions of Workers' Compensation Law § 29" (id. at 708, 820 N.Y.S.2d 89).

As to Aero in Action No. 2, the court concluded that plaintiffs failed to raise a triable issue of fact in response to Aero's demonstrated entitlement to judgment as a matter of law. The court determined that the parties' remaining contentions were either rendered academic or were without merit. This Court granted plaintiffs' motion for leave to appeal.

II. Discussion

A. Action No. 1: Fung v. Japan Airlines Company, Ltd., et al.

Workers' Compensation Law §§ 11 and 29(6) restrict an employee from suing his or her employer or coemployee for an accidental injury sustained in the course of employment. However, the workers' compensation remedy is generally not exclusive if the employee is injured by a third person (see Minkowitz, Practice Commentaries, McKinney's Cons. Laws of N.Y., Book 64, Workers' Compensation Law § 29, at 196). Central to the issue before us is whether JAMC was Fung's employer entitled to claim exclusivity.

Plaintiffs argue that in finding that JAMC acted as the Port Authority's managing agent, the Appellate Division disregarded the clear statement of intent in the JAMC/Port Authority lease; that, in any event, the court misapplied the exclusivity defense to bar their action against JAMC because even if JAMC may be considered the Port Authority's agent, JAMC was neither "in the same employ" as Fung, a Port Authority employee (see § 29[6]), nor Fung's employer within the meaning of Workers' Compensation Law § 11. JAMC, in turn, contends that it was effectively the Port Authority's agent, noting that the JAMC/Aero contract states that JAMC "represents that all charges under this Agreement are incurred by [JAMC] as agent for the Port Authority" and that it signed the contract "As Agents for the Port Authority" (emphasis added).

Initially, we note that whether or not JAMC...