Seymour v. Victor Balata Belting Co.

• Decision Date: 16 September 1997
• Citation: 174 Misc.2d 677,665 N.Y.S.2d 1010
• Parties: , 1997 N.Y. Slip Op. 97,603 Heather SEYMOUR, Plaintiff, v. VICTOR BALATA BELTING COMPANY, Defendant and Third-Party Plaintiff. Fleischer's Bagels Company, Third-Party Defendant.
• Court: New York Supreme Court

Page 1010

665 N.Y.S.2d 1010

174 Misc.2d 677, 1997 N.Y. Slip Op. 97,603

Heather SEYMOUR, Plaintiff, v. VICTOR BALATA BELTING COMPANY, Defendant and Third-Party Plaintiff Fleischer's Bagels Company, Third-Party Defendant.

Supreme Court, Monroe County.

Sept. 16, 1997.

Johnson, Mullan & Brundage, P.C., Rochester (George A. Schell, of counsel) for plaintiff.

Richard T. Moran, Liverpool (Frederick F. Schantz, of counsel), for defendant and third-party plaintiff.

Saperston & Day, P.C., Rochester (Robert M. Shaddock, of counsel), for third-party defendant.

ANDREW V. SIRACUSE, Justice.

In 1996 the New York State Legislature put an end to most contribution and indemnification claims under the rule in Dole v. Dow Chemical Co., 30 N.Y.2d 143, 331 N.Y.S.2d 382, 282 N.E.2d 288; the legislation is L 1996 ch 635. Soon after September 10, 1996, the effective date of the legislation, courts were called upon to decide if the changes were to be effective prospectively or retroactively. After numerous trial-level decisions on the issue, the Second and Third Departments have held strongly for the former interpretation. Both Morales v. Gross, 230 A.D.2d 7, 657 N.Y.S.2d 711 [2d Dept] and Majewski v. Broadalbin-Perth Cent. School Dist., 231 A.D.2d 102, 661 N.Y.S.2d 293 [3d Dept], reversing 169 Misc.2d 429, 653 N.Y.S.2d 822, have held that third-party actions pending on the effective date are governed by the old rule. The court finds these precedents convincing, for reasons which will be apparent below; in any event, this court is bound by them, since the Fourth Department has not yet ruled on this question. The statute must be treated as prospective in operation only.

The present case, however, raises a point that has not been squarely addressed at the Appellate Division level. Both Morales and Majewski speak only of third-party actions pending as of the effective date. In the case before this court, however, the third-party action was commenced by filing on May 16, 1997. The main action was commenced on October 22, 1996--also after the changes became effective--but the accident itself occurred on October 6, 1995. ¹

There are two possible interpretations of the prospective effect of the change: first, that it applies only to workers injured in accidents after the effective date, regardless of the date they bring their action; second, that it applies to all plaintiffs who bring actions after the effective date, regardless of the date of the injury. This issue is dispositive here, since neither the main action nor the third-party action was pending as of September 10, 1996. ² If the legislation affects only post-effective-date accidents, the third-party complaint is good. If it applies to all actions commenced after that date, the complaint must be dismissed.

This Court holds that the abrogation of the rule in Dole is effective only as to accidents occurring on or after September 10, 1996. In explaining the preference for prospective interpretation of enactments, McKinney's explains that "all statutes are presumed to furnish a rule for future action only" (McKinney's Cons.Laws of N.Y., Book 1, Statutes § 51, at 93, emphasis added ). A retroactive statute "is made to affect acts or facts occurring, or rights accruing, before it came in force" (supra, at 87). Thus the focus of the inquiry is the activity regulated by the statute. The legislature presumes that parties govern their conduct by reference to existing law. Since the parties rely upon existing law in negotiating such matters as insurance coverage and indemnification, they should not be penalized by a retroactive statutory change, which could undermine or contradict their contractual allocation of risk.

These considerations apply equally whether or not the parties have commenced an action to enforce these obligations. The date of commencement of an action is essentially arbitrary, and to determine rights based on that date leaves parties at the mercy of the acumen or punctuality of their attorneys. The function of legislation, which is to regulate conduct, is best served by a prospective application of statutory change to the date of the conduct complained of. Anything else would improperly change the rules of the game after a play has been completed.

It is true that the right to indemnification, either statutory or contractual, accrues only upon a judgment in the main action. But the right to such indemnification crystallizes at the time of the occurrence, and appellate courts have uniformly recognized that in such cases an action for a conditional judgment of indemnification is not premature. The same policy considerations discussed above apply with equal force to indemnification and contribution. Indeed, indemnification (along with insurance) is one of the major concerns in construction contracts. There is not likely to be any element of the parties' negotiations that is more intimately bound up with the then-existing state of the law. Applying the new law to contracts entered into before the legislation, governing recovery for accidents that also occurred before the change, can do nothing other than subvert the intent of the contracting parties.

Similar reasoning led Justice Purple, of Steuben County, to a similar result in Frycek v. Corning Inc.:

In addition, construction contracts and indemnification agreements are drafted in view of the law as it exists at the time of the creation of the contract. Parties involved in major construction projects have allocated risks and liabilities and have obtained insurance to cover those risks under the laws as they know them to be. By applying this amendment retroactively to accidents which occurred prior to its passage, the Court would be reallocating those risks and liabilities with no offsetting benefit to the public. This would result in a windfall to some parties and unanticipated losses to others. This retroactive application would not serve the goal of reducing insurance premiums as the...