Liss v. Trans Auto Systems, Inc.

• Decision Date: 03 July 1986
• Citation: 505 N.Y.S.2d 831,496 N.E.2d 851,68 N.Y.2d 15
• Parties: , 496 N.E.2d 851 Bernice LISS et al., Respondents, v. TRANS AUTO SYSTEMS, INC., et al., Appellants.
• Court: New York Court of Appeals Court of Appeals

Page 831

505 N.Y.S.2d 831

68 N.Y.2d 15, 496 N.E.2d 851

Bernice LISS et al., Respondents, v. TRANS AUTO SYSTEMS, INC., et al., Appellants.

Court of Appeals of New York.

July 3, 1986.

Gerald Richman and Abraham L. Shapiro, New York City, for Trans Auto Systems, Inc., and another, appellants.

Bernard Caesar, New York City, and Lynn L. Hershkovits, for Kenneth Fuld, appellant.

Martin Diennor and Abraham Fuchsberg, New York City, for respondents.

OPINION OF THE COURT

TITONE, Judge.

The issue posed is whether a determination made in a workers' compensation proceeding that a worker did not sustain injuries in the course of employment binds those defendants in a liability suit who were not parties to the compensation proceeding. We hold that it does not.

Plaintiff Bernice Liss had been employed by Major Watch Case Co. (Major) for 35 years. For the past 20 of those years, defendant Fuld, president of the company, picked up Liss at her home and transported her to work on most days in an automobile leased by Major from Trans Auto Systems, Inc. (Trans Auto) and Holiday Auto Lease Ltd. (Holiday). On October 22, 1981, during their regular ride to work, Fuld lost control of the car. In the resulting collision with a train pillar, plaintiff sustained severe injuries including a broken hip.

This action was commenced against Fuld, Trans Auto and Holiday. Major is not a party. In their answers, defendants asserted the affirmative defense of workers' compensation coverage, arguing that the accident arose out of and in the course of plaintiff's employment (Workers' Compensation Law § 10[1] ). Defendants' liability carrier denied no-fault benefits on this basis as well. The parties took no action with respect to the suit, pending the resolution of workers' compensation proceedings.

A preliminary hearing was conducted before a workers' compensation Judge at which plaintiff and Fuld testified. The attorneys for plaintiff, the workers' compensation carrier and the no-fault carrier each actively participated. At the conclusion of the hearing, the Judge determined that there might be sufficient evidence to support a finding that the accident arose out of and in the course of employment. He recommended that plaintiff file a formal claim with the Workers' Compensation Board and that a full hearing be held on the issue. Thereafter, plaintiff filed her claim.

At the ensuing hearing, plaintiff and Fuld were again the only witnesses. Only plaintiff's attorney and the attorney for the workers' compensation carrier were allowed to participate. An attorney for the no-fault carrier was present but was permitted only to observe.

Plaintiff's testimony established that she had been employed by Major for 35 years and that for the past 20 she had been driven to work by Fuld 80-85% of the time. She stated on cross-examination that she had no contractual arrangement with regard to the ride, that Fuld would pick her up on his way to work, and that she was carrying no work-related material on the day of the accident. Fuld testified that he had worked for Major for 20 years. He stated that about 18 years ago, he had begun driving plaintiff to work for the convenience of the company and that he has continued to do so 98-99% of the time.

As a result of the evidence presented at the hearing, the workers' compensation Judge found that the accident did not arise out of and in the course of plaintiff's employment. The Board, therefore, closed the case (Workers' Compensation Law § 25[3][b] ) and the parties returned to the judicial forum.

Defendants then made a motion for summary judgment of dismissal (CPLR 3212) in this action, based upon the testimony at the workers' compensation hearing and at the examinations before trial. They argued that the evidence conclusively proved that the accident arose out of and in the course of plaintiff's employment. Plaintiff made a cross motion to strike the affirmative defense of workers' compensation coverage, contending that defendants should be precluded from asserting this position because of the workers' compensation determination. Special Term denied both motions reasoning that summary judgment was inappropriate because the employment question raised factual issues and that defendants could not be precluded from relitigating an issue decided at a hearing in which they were not allowed to participate. That order was not appealed.

Eight months later, plaintiff made a motion to vacate the order (CPLR 5015[a][4] ) "on the ground that it exceeded the reaches of the Court's subject matter jurisdiction" and to strike the affirmative defense or, in the alternative, for an order granting leave to renew plaintiff's motion to strike the affirmative defense on the ground that questions of the availability of workers' compensation are within the exclusive jurisdiction of the Workers' Compensation Board. While Special Term stated that the motion was an untimely attempt to reargue the earlier motion, the court decided to recall its decision sua sponte in the interest of justice, and dismissed the affirmative defense of workers' compensation coverage on the ground that only the employer could raise that defense. Defendants appealed.

The Appellate Division, First Department, affirmed on different grounds. 109 A.D.2d 430, 492 N.Y.S.2d 394. All parties had agreed that the defense of workers' compensation is available to defendants other than the employer (Heritage v. Van Patten, 59 N.Y.2d 1017, 466 N.Y.S.2d 958, 453 N.E.2d 1247; 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; Compensation--Co-Employee's Liability, Ann., 21 A.L.R.3d 845, 868-871; see also, Kenny v. Bacolo, 61 N.Y.2d 642, 472 N.Y.S.2d 78, 460 N.E.2d 219). The court reasoned that O'Rourke v. Long, 41 N.Y.2d 219, 391 N.Y.S.2d 553, 359 N.E.2d 1347, and its progeny led to the conclusion that a finding of compensability or noncompensability by the Workers' Compensation Board, the body charged with exclusive jurisdiction over factual issues upon which compensation depends, was final as to all parties to a civil suit evolving from the same accident. The dissent protested, first, that the untimely motion should not have been entertained at all and, second, that defendants could not be precluded from asserting a position they were never allowed to litigate. The Appellate Division granted leave to appeal and certified the following question: "Was the order of Supreme Court, as affirmed by this Court, properly made?"

Initially, it should be noted that, regardless of statutory time limits concerning motions to reargue, every court retains continuing jurisdiction to reconsider its prior interlocutory orders during the pendency of the action (Aridas v. Caserta, 41 N.Y.2d 1059, 1061, 396 N.Y.S.2d 170, 364 N.E.2d 835; Hudson City Sav. Inst. v. Burton, 99 A.D.2d 871, 872, 472 N.Y.S.2d 749, appeal dismissed 62 N.Y.2d 801). The Special Term Judge's sua sponte decision to rescind his prior order was not an abuse of this discretionary power as a matter of law.

The remaining issue calls for analysis of the interplay between the concepts of jurisdiction and issue preclusion. On the one hand, the Workers' Compensation Board has been said to be vested with primary jurisdiction over factual issues concerning compensation coverage. On the other hand, no one should be precluded from relitigating those issues in a court of law who has not had the opportunity to participate in the compensation hearing. We conclude that the Workers' Compensation Board has primary jurisdiction, but not necessarily exclusive jurisdiction, in factual contexts concerning compensability.

In O'Rourke v. Long, 41 N.Y.2d 219, 228, 391 N.Y.S.2d 553, 359 N.E.2d 1347, supra, we held that "where the availability of workmen's compensation hinges upon the resolution of questions of fact or upon mixed questio of fact and law, the plaintiff may not choose the courts as the forum for the resolution of such questions". The Workers' Compensation Board thus has primary jurisdiction over the issue of the availability of coverage (Botwinick v. Ogden, 59 N.Y.2d 909, 911, 466 N.Y.S.2d 291, 453 N.E.2d 520; Peckham v. Peckham Materials Corp., 102 A.D.2d 884, 477 N.Y.S.2d 58), and a plaintiff has no choice but to litigate this issue before the Board (Cunningham v. State of New York, 60 N.Y.2d 248, 252, 469 N.Y.S.2d 588, 457 N.E.2d 693; McMillan v. Notre Dame Residence Club, 33 Misc.2d 948, 951, 227 N.Y.S.2d 811). If a plaintiff fails to do so, the court should not express an opinion as to the availability of compensation but remit the matter to the Board (O'Rourke v. Long, supra; Gyory v. Radgowski, 89 A.D.2d 867, 869, 453 N.Y.S.2d 243). The Board must be given an opportunity to find plaintiff's injuries the result of a compensable accident. The compensation claim is a jurisdictional predicate to the civil action (O'Rourke v. Long, supra, 41 N.Y.2d at p. 226, 391 N.Y.S.2d 553, 359 N.E.2d 1347; McMillan v. Notre Dame Residence Club, supra, 33 Misc.2d at p. 951, 227 N.Y.S.2d 811).

The Board's decision finally determines the controversy between the parties to the hearing (Workers' Compensation Law § 23; Werner v. State of New York, 53 N.Y.2d 346, 441 N.Y.S.2d 654, 424 N.E.2d 541) who are normally the injured employee and the employer or his workers' compensation carrier (Workers' Compensation Law § 25[3][a] ). Thus, any party to the hearing who had the required notice and opportunity to be heard (Workers' Compensation Law § 25[3][b] ) will be precluded from relitigating issues necessarily decided by the administrative Judge (O'Connor v. Midiria, 55 N.Y.2d 538, 541, 450 N.Y.S.2d 455, 435 N.E.2d 1070; Werner v. State of New York, supra; see, Restatement [Second] of Judgments § 27). As workers' compensation is an exclusive remedy (Workers' Compensation Law § 11), a determination by the Board that a plaintiff is entitled to...