Morales v. Gross

• Decision Date: 21 April 1997
• Citation: 230 A.D.2d 7,657 N.Y.S.2d 711
• Parties: Raymond A. MORALES, Plaintiff, v. Walter J. GROSS, et al., Defendants, Vanderbilt Associates, Defendant and Third-Party Plaintiff-Respondent, The Ullman Company, Inc., Third-Party Defendant-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 711

657 N.Y.S.2d 711

230 A.D.2d 7

Raymond A. MORALES, Plaintiff, v. Walter J. GROSS, et al., Defendants Vanderbilt Associates, Defendant and Third-Party Plaintiff-Respondent The Ullman Company, Inc., Third-Party Defendant-Appellant.

Supreme Court, Appellate Division Second Department.

April 21, 1997.

Goldberg & Carlton, New York City (Gary M. Carlton, Robert Goldberg, and Steven S. Efron, of counsel), for third-party defendant-appellant.

Kelly & McGlynn, New York City (Martin M. McGlynn, of counsel), for defendant third-party plaintiff-respondent.

Before COPERTINO, J.P., and THOMPSON, KRAUSMAN and FLORIO, JJ.

THOMPSON, Justice.

The principal issue before us is whether certain sections of the so-called Omnibus Workers' Compensation Reform Act of 1996 (L. 1996, ch. 635, §§ 2-9 [hereinafter the Act] ) should be applied retroactively to cases pending at the time of their enactment. We conclude that they should not, and affirm the order appealed from.

The facts reveal that the plaintiff Raymond Morales allegedly sustained personal injuries while in the employ of the third-party defendant The Ullman Company, Inc. (hereinafter Ullman). Ullman leased the premises where Morales was working from the third-party plaintiff Vanderbilt Associates (hereinafter Vanderbilt). The plaintiff commenced a personal injury action against Vanderbilt, after which Vanderbilt commenced a third-party action against Ullman, seeking contribution and/or indemnification. Ullman subsequently moved to dismiss the third-party complaint, arguing, inter alia, that, pursuant to the lease, it had obtained liability insurance for the benefit of both itself and Vanderbilt. According to Ullman, the third-party action was barred by the so-called "antisubrogation rule" since the insurance carrier, allegedly the real party in interest, was effectively subrogating to a claim against its own insured--Ullman--for a risk covered by the policy. The Supreme Court denied Ullman's motion.

While the instant matter was pending before this court, the Legislature adopted the Act. Among other things, the Act amended Workers' Compensation Law § 11 by eliminating, except in cases of "grave injury", ¹ an employer's liability "for contribution or indemnity to any third person based upon liability for injuries sustained by an employee acting within the scope of his or her employment" (Workers' Compensation Law § 11, as amended by L. 1996, ch. 635, § 2). The intended effect of the amendment was to abolish most third-party actions under Dole v. Dow Chem. Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288 by which defendants, facing suits by injured employees, seek contribution or indemnity from an employer who would be immune from direct suit by the injured employee (see, L. 1996, ch. 635, § 1; N.Y. Assembly Mem in Support, 1996 McKinney's Session Laws of N.Y., at 2565. The Act mentions nothing about retroactive application of the subject sections, indicating only that they are to take "effect immediately" (L. 1996, ch. 635, § 90). Under the circumstances, we conclude that the relevant sections of the Act are inapplicable to the subject third-party action.

Analysis begins with the well-settled principle that statutes are presumptively prospective in their application absent an express legislative intent to the contrary (see, Matter of Deutsch v. Catherwood, 31 N.Y.2d 487, 489-490, 341 N.Y.S.2d 600, 294 N.E.2d 193; see also, Matter of Duell v. Condon, 84 N.Y.2d 773, 783, 622 N.Y.S.2d 891, 647 N.E.2d 96; Dorfman v. Leidner, 76 N.Y.2d 956, 959, 563 N.Y.S.2d 723, 565 N.E.2d 472; Matter of Thomas v. Bethlehem Steel Corp., 63 N.Y.2d 150, 154, 481 N.Y.S.2d 33, 470 N.E.2d 831; Matter of Beary v. City of Rye, 44 N.Y.2d 398, 406 N.Y.S.2d 9, 377 N.E.2d 453; see also, Becker v. Huss Co., 43 N.Y.2d 527, 540, 402 N.Y.S.2d 980, 373 N.E.2d 1205; Matter of Bac v. State of New York Off. of Mental Health, 203 A.D.2d 283, 609 N.Y.S.2d 648; McKinney's Cons. Laws of N.Y., Book 1, Statutes, § 51[b], [c]; 2 Sutherland, Statutory Construction, § 41.02 at 341-342 [Singer 5th ed]; Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229). Indeed, "the presumption against retroactive legislation is deeply rooted in our jurisprudence, and embodies a legal doctrine centuries older than our Republic. Elementary considerations of fairness dictate that individuals should have an opportunity to know what the law is and conform their conduct accordingly; settled expectations should not be lightly disrupted" (Landgraf v. USI Film Products, supra, 511 U.S. at 265, 114 S.Ct. at 1497; Matter of Chrysler Props. v. Morris, 23 N.Y.2d 515, 522, 297 N.Y.S.2d 723, 245 N.E.2d 395). The foregoing principle comports with "another venerable rule of statutory interpretation, i.e., that statutes affecting substantive rights and liabilities are presumed to have only prospective effect" (Bennett v. New Jersey, 470 U.S. 632, 639, 105 S.Ct. 1555, 1560, 84 L.Ed.2d 572). Significantly, the principle requiring a clear legislative expression that retroactive application was intended is an important one, since such a statement constitutes evidence that the Legislature has affirmatively assessed the potential for unfairness created by retroactivity and concluded that it is an acceptable price to pay for the anticipated benefits (cf., Matter of Chrysler Props. v. Morris, supra, at 518, 297 N.Y.S.2d 723, 245 N.E.2d 395; Landgraf v. USI Film Products, supra, 511 U.S. at 272-273, 114 S.Ct. at 1501).

Here, the Act itself contains no express statement--in fact, no statement at all--indicating that the Legislature intended sections 2 through 9 of the Act (L. 1996, ch. 635, §§ 2-9) to apply to actions pending at the time of their passage. Although section 90 of the Act indicates that sections 2 through 9 are to become "effect[ive] immediately" (L. 1996, ch. 635, § 90), where a statute employs this phrase, "it does not have any retroactive operation or effect" (McKinney's Cons. Laws of N.Y., Book 1, Statutes, § 51[b], at 92; accord, Moynihan v. New York State Employees' Retirement Sys., 192 A.D.2d 913, 596 N.Y.S.2d 570; Fuerst v. Fuerst, 131 A.D.2d 426, 515 N.Y.S.2d 862; Stromer v. Granata, 124 Misc.2d 934, 935, 479 N.Y.S.2d 931; Murphy v. Board of Educ. North Bellmore Union Free School Dist., 104 A.D.2d 796, 480 N.Y.S.2d 138, affd. 64 N.Y.2d 856, 487 N.Y.S.2d 325, 476 N.E.2d 651). Further buttressing this conclusion is the fact that section 90 of the Act, which makes reference to certain sections of the Act which are to apply retroactively, makes no similar mention of the provisions at issue here (L. 1996, ch. 635, § 90). If the Legislature intended the repeal of liability under Dole v. Dow Chem. Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288, supra to apply to pending actions, it could have easily indicated as much, as it did with other sections of the Act (see, Frycek v. Corning, Inc., 171 Misc.2d 220, 654 N.Y.S.2d 264; Flynn v. New York Life Ins. Co., NYLJ, Oct. 24, 1996, at 31, col 3 [Sup. Ct., Suffolk County] ).

Nor does the legislative history contain any clear pronouncement indicating that dismissal of pending actions was intended by the framers of the Act. Although the Governor's approval memorandum recounts that retroactive "repeal" of Dole v. Dow Chem. Co. (supra) was intended (Governor's Mem approving L. 1996, ch. 635, 1996 McKinney's Session Laws of N.Y., at 1912), very explicit statements made by one of the Act's sponsors during actual debate in the Legislature support precisely the opposite result, i.e., that prospective application was intended (see, N.Y. State Assembly Pub. Information Off., Transcript of N.Y. State Assembly Proceedings on A 11331, July 12, 1996, at 618-625). Accordingly, the only contemporaneously made legislative statement which addresses the issue of retroactivity, unequivocally indicates that the relevant sections of the Act were to apply prospectively. Moreover, none of the other materials pertinent to the issue of legislative intent support the claim that application to pending matters was intended.

Section 1 of the Act, entitled "legislative intent" states, among other things, that the Act should be "interpreted and implemented in the spirit in which [the Workers' Compensation Law] was first enacted", and that it was the Legislature's intent "to create a system which protects injured workers and delivers wage replacement benefits in a fair, equitable and efficient manner, while reducing time-consuming bureaucratic delays, and repealing Dole liability except in cases of grave injury" (L. 1996, ch. 635, § 1). A report issued in conjunction with the Act by the Assembly Majority Task Force on Workers' Compensation Reform indicates additionally that six consecutive years of double-digit increases in compensation premiums over several years in the late 1980's and early 1990 "cost thousands of jobs in New York, particularly in small business" and that an immediate reduction in rates was perceived as necessary in order to "make New York companies competitive with other states" (1996 Report of Task Force, at 3). The legislative memorandum filed in connection with the Act further discusses its objectives observing that "[t]he exclusive remedy, a cornerstone of the Workers' Compensation Law, is restored and reinforced under this bill by prohibiting third parties * * * from asserting Dole, or third-party suits against the employer. This repeal of Dole will reduce workers' compensation premium costs without diminishing employees' legal rights against responsible third parties" (N.Y. Assembly Mem in Support, 1996 McKinney's Session Laws of N.Y., at 2565). None of these materials states that the "repeal" of Dole liability was intended to apply to actions pending at the time the Act was passed.

Ullman further argues that the amendments are remedial, and that their reach must be retroactively extended in order to spread their benefits as broadly as possible (...