Liss v. Trans Auto Systems, Inc.

• Decision Date: 01 August 1985
• Citation: 492 N.Y.S.2d 394,109 A.D.2d 430
• Parties: Bernice LISS and Kalman Liss, Plaintiffs-Respondents, v. TRANS AUTO SYSTEMS, INC., Holiday Auto Lease Ltd., and Kenneth Fuld, Defendants-Appellants.
• Court: New York Supreme Court — Appellate Division

Page 394

492 N.Y.S.2d 394

109 A.D.2d 430

Bernice LISS and Kalman Liss, Plaintiffs-Respondents, v. TRANS AUTO SYSTEMS, INC., Holiday Auto Lease Ltd., and Kenneth Fuld, Defendants-Appellants.

Supreme Court, Appellate Division First Department.

Aug. 1, 1985.

Gerald Richman, New York City, of counsel (Abraham L. Shapiro, New York City, with him on brief; Shapiro, Shiff, Beilly, Rosenberg & Fox, New York City, and Wollerstein & Futoran, Brooklyn, attorneys), for defendants-appellants Trans Auto and Holiday Auto Lease.

Paul Kovner, New York City, of counsel (Ginsberg & Caesar, P.C., New York City, attorneys), for defendant-appellant Kenneth Fuld.

Paul F. McAloon, New York City, of counsel (Abraham Fuchsberg, New York City, with him on brief; Fuchsberg & Fuchsberg, New York City, attorneys), for plaintiffs-respondents.

Before KUPFERMAN, J.P., and SULLIVAN, ASCH, KASSAL and ELLERIN, JJ.

ELLERIN, Justice.

The facts giving rise to the instant action are essentially as stated in the dissent. The automobile in which plaintiff was a passenger on October 22, 1981 was owned by the defendant Holiday Auto Lease Ltd. ("Holiday"), was leased to plaintiff's employer, Major Watchcase Co. ("Major") and was being operated at the time of the accident by defendant Kenneth Fuld, President of Major. (The defendant Trans Auto Systems, Inc. is a predecessor corporation of Holiday that had at some previous time owned the vehicle and is, therefore, not seriously involved in the action.)

For some months following the accident plaintiff collected disability benefits from her employer and instituted this action in March, 1982, against Fuld, the driver, and Holiday and Trans Auto, as the owners. In their answers defendants asserted the defense of Workers' Compensation and refused to pay no-fault benefits on that ground. This led to a preliminary Workers' Compensation hearing at which plaintiff and Mr. Fuld testified and at which the attorney assigned to Fuld by the liability carrier for the automobile actively participated. At the conclusion of that hearing, the Workers' Compensation Judge rendered an opinion that there might be sufficient evidence to warrant a finding that this accident arose out of and in the course of employment and that "upon filing a formal claim with Workers' Compensation, a full and complete hearing will be held and a final determination made as to whether the accident arose out of and in the course of the employment". Pursuant to the recommendation of the judge at the preliminary hearing, plaintiff filed a claim in order to resolve the issue and a formal hearing was held on September 15, 1982. Both plaintiff and Mr. Fuld again testified. A synopsis of their testimony is set forth in the dissent. At the conclusion of the testimony, the Workers' Compensation Judge found that the accident had not arisen out of and in the course of the plaintiff's employment.

The motion practice that followed in the court below, with defendants continuing to assert the defense of Workers' Compensation and plaintiff seeking to strike such defense, ultimately resulted in the sua sponte decision before us striking the defense on the ground that such defense is available only to the employer. While the rationale relied upon by Special Term was concededly in error (Naso v. Lafata, 4 N.Y.2d 585, 176 N.Y.S.2d 622, 152 N.E.2d 59; Rauch v. Jones, 4 N.Y.2d 592, 176 N.Y.S.2d 628, 152 N.E.2d 63) we believe that defense was properly stricken but for different reasons.

The crucial issue here is the effect that must be accorded the Workers' Compensation finding that the instant accident did not arise out of and in the course of plaintiff's employment. Or phrased somewhat differently, is the court bound by such finding or may that issue be relitigated de novo in the judicial forum?

Defendants' position, adopted in the dissent, is that the Workers' Compensation finding has no application to them because they were not parties to the formal compensation proceeding and therefore they are entitled to have a judicial determination on the issue of whether Workers' Compensation applies to this accident. We disagree.

Defendants and the dissent approach the issue from a traditional collateral estoppel vantage. Whatever the merits of that position may have been in the past, that posture is no longer viable in light of the Court of Appeals' decision in O'Rourke v. Long, 41 N.Y.2d 219, 391 N.Y.S.2d 553, 359 N.E.2d 1347 which posits exclusive jurisdiction in the Workers' Compensation Board on such issue. The court in O'Rourke made clear that where the availability of Workers' Compensation depends, as here, upon questions of fact, or mixed questions of fact and law, responsibility for determining such issue has legislatively been imposed upon the Workers' Compensation Board, and that the decision of the Board is final on all questions within its jurisdiction unless reversed or modified on appeal. The court also expressly noted that "respect to a board determination that a particular injury was or was not sustained in the course of employment, the judicial appellate function is limited" (p. 227, 391 N.Y.S.2d 553, 359 N.E.2d 1347). This conclusion was presaged in the court's earlier decision in Ogino v. Black, 304 N.Y. 872, 109 N.E.2d 884 when it answered affirmatively the question: "Is the determination of the Workmen's Compensation Board to the effect that the accidental injury did not arise out of or in the course of plaintiff's employment binding on the courts of this State in an action for negligence based upon the same accident?"

The holding in O'Rourke vesting exclusive jurisdiction in the Compensation Board to determine the factual issues on which compensation depends would appear to be designed to afford some order and congruity in this area and to prevent the kinds of inconsistencies and anomalies that would ensue from permitting the same issue to be variously litigated by the Compensation Board and the courts. (See e.g. discussion in Geller v. Sherman, 48 Misc.2d 1049, 1051-52, 266 N.Y.S.2d 671; affd. 28 A.D.2d 959, 282 N.Y.S.2d 937; affd. 21 N.Y.2d 976, 290 N.Y.S.2d 204, 237 N.E.2d 364.) Thus, in the O'Rourke case itself, the court remitted the plaintiff to the Board for a determination on the issue of whether his accident arose in the course of his employment, observing that should such claim be rejected, plaintiff would then possess a tort action cognizable in the judicial forum.

The exclusive jurisdiction of the Workers' Compensation Board to determine the issue of whether or not a particular incident is within the course of employment has been reiterated and reaffirmed in numerous cases since its enunciation in O'Rourke. (See e.g., Botwinick et al. v. Ogden, et al., 59 N.Y.2d 909, 466 N.Y.S.2d 291, 453 N.E.2d 520; O'Connor v. Midiria, 55 N.Y.2d 538, 541, 450 N.Y.S.2d 455, 435 N.E.2d 1070; Werner v. State, 53 N.Y.2d 346, 441 N.Y.S.2d 654, 424 N.E.2d 541; Matter of Young v. Henry M. Young, Inc., 56 A.D.2d 941, 942, 392 N.Y.S.2d 502; Matter of Comr. of Taxation & Fin. v. Fisher, 89 A.D.2d 664, 453 N.Y.S.2d 103; Orzechowski v. Warner-Lambert Co., 92 A.D.2d 110, 460 N.Y.S.2d 64; Matter of Hartham v. Geo A. Fuller Co., et al., 89 A.D.2d 720, 453 N.Y.S.2d 843; Matter of Young v. Western Electric Co., 85 A.D.2d 823, 445 N.Y.S.2d 645.)

Particularly illuminating in demonstrating the impact of the rule enunciated in O'Rourke v. Long, supra, upon a case such as this is the decision in Gyory v. Radgowski, 89 A.D.2d 867, 453 N.Y.S.2d 243. In that case, as in the case before us, plaintiff was injured in a rented automobile driven by a co-employee, with the critical issue being whether the accident occurred in the course of plaintiff's employment. The action was instituted in 1973 (prior to the decision in O'Rourke ) with defendants asserting, inter alia, the defense of Workers' Compensation. Special Term's refusal to dismiss that defense, on the ground that there were questions of fact as to whether Workers' Compensation was the exclusive remedy which required a determination by trial, was affirmed by the Appellate Division. After the trial was aborted in 1979, the case again came before the Appellate Division at which time that court retroactively applied the O'Rourke rule. In so doing it stated that "the extent of the trial courts jurisdiction to determine the applicability of workers' compensation depends upon whether the issue is one of fact, law or a mixed question of fact and law. When the question is purely one of fact, the Workers' Compensation Board has exclusive jurisdiction ..." (underlining added). Because the various proceedings at Workers' Compensation had been frustrated by plaintiff's own intransigence so that no final determination on the "course of employment" issue had been made by Compensation, the Appellate Division referred the case back to the Workers' Compensation Board to hold a factual hearing upon which a determination could be made as to that issue. Significantly, the court concluded as follows: "If the board should determine that the plaintiff husband was not in the course of his employment when the accident occurred, then the plaintiff's motion to strike the second affirmative defense * * * * should be granted."

In the instant case, of course, that determination has already been made by the Workers' Compensation Board and it has neither been reversed nor modified. That another finder of fact might have reached a different conclusion is irrelevant since it is the Workers' Compensation Board determination that is controlling. Accordingly, since the body charged with responsibility for determining the applicability of Workers' Compensation to this accident has found that it does not here apply, the affirmative defense of Workers' Compensation cannot stand and was, therefore, properly stricken in the court below.

While our affirmance is predicated upon the jurisdictional directive of the O'Rourke case, we would note...