James v. State

• Decision Date: 17 December 1982
• Citation: 90 A.D.2d 342,457 N.Y.S.2d 148
• Parties: In the Matter of Kathleen JAMES, Individually and as Administratrix of the Estate of Danny R. Neff, Deceased, Respondent, v. The STATE of New York and The New York State Insurance Fund, Appellants.
• Court: New York Supreme Court — Appellate Division

Page 148

457 N.Y.S.2d 148

90 A.D.2d 342

In the Matter of Kathleen JAMES, Individually and as Administratrix of the Estate of Danny R. Neff Deceased, Respondent, v. The STATE of New York and The New York State Insurance Fund Appellants.

Supreme Court, Appellate Division Fourth Department.

Dec. 17, 1982.

Robert Abrams, Atty. Gen., Albany, for appellants; Peter Dooley, Asst. Atty. Gen., Albany, of counsel.

Paul William Beltz, P.C., Buffalo, for respondent; Francis Letro, Buffalo, of counsel.

Robert Silk, New York City, for New York State Trial Lawyers Ass'n, amicus curiae.

Nixon, Hargrave, Devans & Doyle, Rochester, for American Ins. Ass'n, and Alliance of American Insurers, amicus curiae.

Before SIMONS, J.P., and HANCOCK, CALLAHAN, BOOMER and MOULE, JJ.

MOULE, Justice.

The issue presented on this appeal is whether an administratrix of the estate of an employee killed in a work related accident may bring an action against the worker's compensation carrier of decedent's employer for negligent inspection of the worksite.

An action against the State of New York and the New York State Insurance Fund (carrier) ¹ was brought by Kathleen James, individually and as administratrix of the estate of decedent, Danny Neff, after he sustained fatal injuries at the Everest Brockway Saw Mill when he came into contact with a 56-inch saw blade which was allegedly unguarded. Claimant alleges that defendant was negligent in failing to inspect properly and adequately the premises of the saw mill, in failing to warn of the dangerous condition of the saw, in providing worker's compensation insurance when a dangerous condition existed and that defendant breached its contract express and implied.

The contract of insurance between defendant and decedent's employer provided that:

INSPECTION AND AUDIT: THE STATE INSURANCE FUND and any authorized rating board or bureau operating under the insurance laws of the State of New York designated by THE STATE INSURANCE FUND, shall each be permitted but not obligated to inspect at any reasonable time during the policy period the workplaces, operations, plants, machinery, appliances and equipment covered by this policy. Neither the right to make inspections nor the making thereof nor any report thereon shall constitute an undertaking on behalf of or for the benefit of the employer or others, to determine or warrant that such workplaces, operations, plants, machinery, appliances and equipment are safe.

Defendant moved to dismiss the claim for, among other things, failure to state a cause of action. Special Term denied the motion, relying on the authority of Cline v. Avery Abrasives, 96 Misc.2d 258, 409 N.Y.S.2d 91 for the proposition that, once a carrier assumes the obligation of performing safety inspections on the employer's premises, it may be held liable for conducting a negligent inspection.

The rule relied on by Special Term is that "one who assumes to act, even though gratuitously, may thereby become subject to the duty of acting carefully, if he acts at all" (Glanzer v. Shepard, 233 N.Y. 236, 239, 135 N.E. 275). This rule has been limited, however, to apply only to those situations wherein the action taken is for the benefit of another and not in furtherance of the interest of the one who assumes to act (Home Mut. Ins. Co. v. Broadway Bank & Trust Co., 53 N.Y.2d 568, 444 N.Y.S.2d 436, 428 N.E.2d 842).

In discussing the applicability of this principle, the Court of Appeals in Home Mutual Insurance Company, 53 N.Y.2d at 576, 444 N.Y.S.2d 436, 428 N.E.2d 842 cited Gerace v. Liberty Mut. Ins. Co., 264 F.Supp. 95, 97, which dismissed an action against a contractor's liability insurance carrier by a workman injured by a defective condition on a construction site previously inspected by the carrier. The Court quoted the following language from the Gerace opinion:

There is a general principle of law that a person who volunteers to do something that he is under no obligation to do, must nevertheless use due care in carrying on the voluntary activity. This doctrine applies if the volunteered act is undertaken for the benefit of someone else. A Good Samaritan who carelessly injures the person he is trying to help may perhaps be liable for his negligence.

In this case, however, the insurance carrier did not undertake to perform a voluntary act for the benefit of someone else. It did so for its own protection in order to reduce risks that might give rise to liability on the policy.

The language of the insurance contract expressly disclaims that any inspection or report thereon is conducted for the benefit of the employer or others. As in Gerace v. Liberty Mut. Ins. Co., supra, the inspection was conducted for the carrier's own protection to reduce risks that might give rise to liability or possibly for the purpose of ratesetting since the language of the policy provides that an authorized rating bureau may inspect. Whatever the underlying purpose of the inspection, the contract clearly indicates that it was not for the benefit of any other person and, therefore, claimant's attempt to hold defendant liable for its alleged gratuitous undertaking must fail (see Rosenhack v. State of New York, 112 Misc.2d 967, 447 N.Y.S.2d 856; Nieto v. Investors Insurance Co. of America, N.Y.L.J., December 14, 1981, p. 18, col. 5).

Claimant asserts that dismissing the claim would be premature without the benefit of pretrial discovery. She argues that pretrial discovery may provide further definition of the "purpose and thought" behind the inspection (see Nelson v. Union Wire Rope Corp., 31 Ill.2d 69, 199 N.E.2d 769).

We disagree with claimant's assertion that pretrial discovery might substantiate this claim. Even if assurances of the adequacy of the inspection or of the safety of the premises were disclosed, such assurances would not enlarge the scope of the duty undertaken by defendant as defined in its contract. Although the claim is based on negligence and not on the contract, ² the scope of the undertaking must be determined in the context of the contract and not in isolation from it since any inspection which may have occurred was conducted pursuant to the permissive clause in the contract. Viewed in this context, the undertaking was clearly not for the benefit of the employer or employee. We cannot read the express language out of the contract in order to convert this inspection, conducted for defenda...