INSIDE THIS ISSUE
DISTRICT COURT WATCHES ITS PRO-COVERAGE DECISION SLIP SLIDING AWAY
FIFTH AMENDMENT - A SWORD & A SHIELD FOR INSUREDS?
TRIGGER OF BUSINESS INTERRUPTION COVERAGE
EMPLOYER LIABILITY IN NEW YORK: A DISAPPEARING CONCEPT
INSERT - - "My Cup Boileth Over" by Eugene Wollan
INSERT - - "Unique Weather Claims: Snow Removal, Sue & Labor, and Ingress and Egress" by Costantino P. Suriano
DISTRICT COURT WATCHES ITS PRO-COVERAGE DECISION SLIP SLIDING AWAY
- – David W. Kenna
The Fourth Circuit Court of Appeals recently reversed a decision by the United States District Court for the District of South Carolina that granted summary judgment to an insured in favor of coverage under a Standard Flood Insurance Policy ("Policy"). Smoak v. Independent Fire Insurance Company, Civ. No. 95-1100 (4th Cir. June 23, 1999).
In January 1993, heavy rains caused the waters of Hermitage Lake in Camden, South Carolina to rise, reaching the level of the foundation of the lakefront home of the plaintiffs, William and Rosa Smoak. The receding of the water, approximately seventy-two hours later, caused the land beneath the Smoaks' home to subside, cracking a concrete foundation slab and causing $23,256.00 in damage to the foundation and walls of the home.
The plaintiffs were insured at the time of the flood under a flood insurance policy issued by the defendant, Independent Fire Insurance Company. The Policy defined a "flood" as:
A. A general and temporary condition of partial or complete inundation of normally dry land areas from:
1. The overflow of inland or tidal waters.
2. The unusual and rapid accumulation or runoff of surface waters from any source.
3. Mudslides (i.e., mudflows) which are proximately caused by flooding as defined in subparagraph A-2 above and are akin to a river of liquid and flowing mud on the surfaces of normally dry land areas ... as when the earth [is] carried by a current of water and deposited along the path of the current.
B. The collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding the cyclical levels which result in flooding as defined in A-1 above.
The policy provided indemnification for "Direct Physical Loss by or from Flood" as that phrase is defined in the policy. The policy, however, specifically excluded:
Loss caused by ... land sinkage, land subsidence, landslide, destabilization or movement of land resulting from the accumulation of water in subsurface land areas, gradual erosion, or any other earth movement except such mudslides (i.e., mudflows) or erosion as is covered under the peril of flood.
Independent denied coverage, relying upon this exclusion. The District Court, however, looked beyond the terms of the Smoaks' policy and relied upon a distinction between the definition of flood in that policy and the definition of flood established by the Federal Emergency Management regulations, which expanded the definition of flood as follows:
(b) the collapse or subsidence of land along the shore of a lake or other body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels or suddenly caused by an unusually high water level in a natural body of water, accompanied by a severe storm, or by an unanticipated force of nature, such as a flash flood or an abnormal tidal surge, or by some similarly unusual and unforeseeable event which results in flooding as defined in (a) (1) of this Section. 44 C.F.R. § 59.1 (3).
The Court of Appeals held that the District Court's application of the FEMA definition was error because the Court failed to recognize that the language of the Smoaks' policy, which governed the dispute, explicitly limited the definition of flood to the one set forth in the policy itself.
The expanded definition in the FEMA regulation was inapplicable. Thus, the District Court should not have considered the language.
The Court of Appeals recognized that the plaintiffs' coverage could have been extended by operation of the policy liberalization clause to include the "Losses Not Covered" provision, which carved out certain exceptions to the land subsidence exclusion of the policy:
Land subsidence, sewer backup, or seepage of water unless, subject to additional deductibles as provided for at Article 7, (a) there is a general and temporary condition of flooding in the area, (b) the flooding is the proximate cause of the land subsidence, sewer backup, or seepage of water, (c) the land subsidence, sewer backup, or seepage of water damage occurs no later than 72 hours after the flood has receded, and (d) the insured building must be insured, at the time of the loss, for at least 60 percent of its replacement cost or the maximum amount of insurance available under the National Flood Insurance Program.
The Court found, however, that the rule amending the policy to add coverage for land subsidence did not become effective until October 1, 1994, after the flood that caused the plaintiff's damages.
"The liberalization provision does not give retroactive effect to new policy terms; rather, it served as a device for automatically reading into existing policies beneficial changes as soon as FEMA makes them and declares them to be in force." Criger v. Beckton, 902 F.2d 1348, 1352 (8th Cir. 1990). Thus, although the amendment would likely have provided coverage for the loss, the amendment postdated the plaintiffs' loss and so was not effective.
Finally, the Court of Appeals recognized that the District Court could consider the earth movement exclusion in the policy to decide whether or not there was coverage, and so the Court remanded the case to the District Court to determine whether or not coverage was provided under the policy. The action has since been dismissed on consent.
FIFTH AMENDMENT - A SWORD & A SHIELD FOR INSUREDS?
– Maria C. John
"Pleading the fifth" is not something we often consider outside of the criminal law context. But in a 1998 case, an insured attempted to assert her fifth amendment rights to prevent her insurer from uncovering material facts regarding coverage under her homeowner's insurance policy. See Anderson v. Southern Guaranty Ins. Co. of Georgia, 235 Ga.App. 306 (Ga. Ct. App. 1998).
In Anderson the plaintiff, Betty Anderson, demanded coverage and a defense under a homeowners policy after she was sued for damages by a couple, Mr. & Mrs. Vaughn, who alleged in their complaint that Anderson injured Mrs. Vaughn by committing various intentional torts. The trial court granted summary judgment in favor of the insurer, Southern Guaranty, declaring that there was no coverage or duty to defend because the policy excluded coverage for bodily injury expected or intended by Anderson. Anderson appealed from the lower court decision. Southern Guaranty commenced a declaratory judgment action against the insured to determine coverage and whether a duty to defend existed as to the civil action.
The underlying complaint alleged that Anderson entered a school bus as Mrs. Heddie Vaughn was driving and began shouting obscenities at Vaughn. Vaughn alleged that Anderson struck her repeatedly with a cane, grabbed her by the foot, and dragged her off the bus onto the ground, where Anderson continued her attack. Vaughn alleged that she sustained serious injuries as a result of the attack, including torn knee ligaments and multiple contusions. Mr. & Mrs. Vaughn sued Anderson for assault and battery, false imprisonment, intentional infliction of emotional distress, punitive damages, and loss of consortium. Criminal charges were also brought against Anderson as a result of the incident. Anderson denied these allegations and claimed that the injuries sustained by Vaughn were accidental and not expected or intended.
Anderson's policy provided coverage for and a defense against accidental occurrences in which any resulting bodily injury was not expected or intended by the insured. Because the complaint alleged intentional acts on the part of Anderson, Southern Guaranty asserted there was no coverage under the policy. Anderson claimed that the complaint against her falsely indicated non-coverage and that the true facts would place the claim within the policy coverage. The court reasoned that the issue regarding the insurer's duty to defend was whether the true facts showing coverage were known or ascertainable to Southern Guaranty. The court found that Southern Guaranty had a duty to conduct a reasonable investigation into Anderson's contentions, and if the investigation revealed facts arguably placing the claim within the policy coverage, then Southern Guaranty would have a duty to defend.
But Southern Guaranty's attempts to pursue a reasonable investigation were stalled by the insured's actions. When the insurer deposed Anderson, she repeatedly refused to answer questions as to what happened during the incident with Vaughn. Following her attorney's advice, she cited her Fifth Amendment privilege against self-incrimination in refusing to answer questions. Anderson would only give general testimony that any injuries suffered by Mrs. Vaughn were accidental and that she did not expect or intend bodily injury to Vaughn. (It is interesting to note that a jury disagreed. Anderson was convicted in a jury trial of aggravated assault on Vaughn with a cane, simple battery, and seven counts of reckless conduct for endangering the safety of school children.)
Anderson contended that even though she had been found guilty on the criminal charges arising out of the incident, a real danger of self-incrimination existed because of the possibility that her pending motion for a new trial in the criminal case might be granted by the trial court. Southern Guaranty contended that Anderson's refusal to answer its questions placed her in violation of the insurance contract by failing to cooperate. The policy provided that, after a claimed accident, the insured has a duty "to secure and give evidence;" and that "the entire policy will be void if, whether before or after a loss, an insured has . . . intentionally concealed or misrepresented any material fact or circumstance." Southern Guaranty claimed that in refusing to answer questions material to its investigation, Anderson violated these policy provisions. Anderson's counter argument was that she would be unfairly forced to confront the dilemma of either refusing to answer questions in violation of the insurance contract, or answering the questions and forfeiting her Fifth Amendment right.
The court found that although Anderson's argument might normally have validity, it did not under the circumstances, because the dilemma of which she complained was of Anderson's own making. The court said that Anderson could not wield her Fifth Amendment privilege as a shield and a sword by demanding coverage and a defense under the insurance contract. The Fifth Amendment privilege did not excuse Anderson from complying with her obligations under the insurance contract. But the court also refused to deem Anderson's actions as a failure to cooperate, stating that "willfulness and fraud are essential ingredients to substantiate the defense of failure to cooperate." Anderson offered to answer the questions fully after the pending criminal proceedings and the danger of self-incrimination had terminated. On these facts, the court found no basis to conclude that Anderson's refusal to cooperate was wilful or fraudulent. Further, Southern Guaranty made no showing that any delay in obtaining the information from Anderson had a materially adverse impact on its ability to protect its rights as to the claim. Thus, the court found that since the criminal proceedings against Anderson were terminated, Southern Guaranty would now be entitled to complete its investigation by questioning Anderson without a Fifth Amendment limitation. The court held that a factual issue still existed as to whether any bodily injury to Vaughn was expected or intended by Anderson so it reversed the part of the lower court's ruling granting summary judgment to the insurer.
The Anderson case demonstrates that "as long as an insured claims an unintentional or justifiable act, offers to cooperate fully, and has an opportunity to cooperate without prejudicing the insurer, the Fifth Amendment privilege against self-incrimination seems to trump the liability insurance policy's duty of cooperation." See Cotter, L. and McDaniel, Jr., Charles, Insurance, 51 Mercer L. Rev. 313 (Fall, 1999). The case also signaled a shift in Georgia insurance law because an insurer "can no longer rely on the ‘four corners' test for ascertaining coverage; instead, the insurer must shoulder the duty of reasonable investigation when faced with the contentions of an insured that, if believed, might warrant coverage." See id.
But the case also begs the question of whether an insured's promise to cooperate together with an assertion of the Fifth Amendment privilege should be enough to essentially nullify the cooperation provisions of an insurance policy. While Southern Guaranty's investigation was pending, Anderson had been convicted of the allegations in the complaint. The conviction was by then a matter of public record. See Anderson v. State, 228 Ga.App 453 (Ga. Ct. of App. 1997). In the criminal trial, the children on the school bus corroborated the complainants' version of events that Anderson intentionally attacked Mrs. Vaughn. Anderson refused to answer questions that would supply the insurer with her version of events. In light of this, could the insurer justifiably rely on the criminal case record alone as "reasonable investigation?" Probably not, as this would place Anderson in the same dilemma of having to choose between her Fifth Amendment privilege and her rights under the policy.
However, if the issue is whether the insurer knew or could ascertain the "true facts" showing coverage, then is it reasonable for an insured, as Anderson did, to breach the insurance policy and delay the insurer from ascertaining those true facts simply by citing the Fifth Amendment and promising to cooperate? In theory, the Anderson court supports the proposition that the Fifth Amendment does not excuse an insured from obligations under an insurance contract, yet in practice, Anderson succeeded in doing just what the court said she couldn't do - using her Fifth Amendment privilege as both a sword and a shield. Anderson was not penalized for citing her privilege against self-incrimination; she avoided a grant of summary judgment because with her silence the "true facts" could not readily be obtained by the insurer; and Southern Guaranty was delayed in obtaining information necessary to determining coverage until Anderson's criminal proceedings were complete and the Fifth Amendment limitation no longer existed. The Anderson case may have placed too great a burden on Georgia insurers.
-Maria C. John
TRIGGER OF BUSINESS INTERRUPTION COVERAGE
-Elisa T. Gilbert
Does a policy providing coverage for "loss resulting directly from the necessary interruption of business caused by damage to or destruction of real or personal property..." necessitate a total cession of business in order to trigger coverage?
In Quality Oilfield Products, Inc. v. Michigan Mutual Ins. Co., 971 S.W.2d 635 (Tex. App. Houston [14th Dist.] 1998), Michigan Mutual Insurance Company brought a declaratory judgment action to determine its obligations on a claim for business interruption where the insured merely suffered a reduction in operations due to the theft of computer design information and engineering drawings. Michigan argued that "interruption of business" was unambiguous language requiring the suspension of operations for coverage to attach.
Quality Oilfield Products, Inc., a manufacturer of oilfield equipment used for drilling and production, was burglarized in March 1992. Immediately after the burglary Quality filed a claim for business interruption losses under an insurance policy issued by Michigan. Quality claimed the items stolen were the "nerve center of its operations and caused an interruption of its normal business activity". Michigan denied coverage because Quality's loss did not necessitate that it suspend operations as required by the policy.
Citing Lexington Ins. Co. v. Island Recreational Dev. Corp., 706 S.W.2d 754 (Tex.App 1986), Quality argued that "interruption of business" did not require total cessation, shutdown, or stoppage of business. In Lexington, the court noted that the insured was entitled to business interruption coverage for losses sustained from a storm even though its restaurant resumed business operations. The court held that the terms of the policy allowed recovery for the period the restaurant was rebuilding its business. There, the insured had in fact been closed for several months and the issue before the court was the duration of the business interruption, specifically, whether the insured could continue to recover after the restaurant reopened and until the previous level of operation was restored. The Quality Court held that Lexington did not apply because the business interruption coverage was triggered after the insured suspended its operations and ceased business for a period of time.
The Quality court considered guidance furnished by other jurisdictions to assess whether a work slow down, as opposed to a complete shut down of operations, should be sufficient to trigger business interruption coverage. The court concluded that other jurisdictions that have evaluated similar language in business interruption insurance clauses generally require an actual suspension of operations to trigger coverage. For example, the Eleventh Circuit in Ramada Inn Ramogreen, Inc. v. Travelers Indem. Co. of America, 835 F.2d 812, 814 (11th Cir.1988) held that an insured could not recover under a business interruption clause for the decline in occupancy of a hotel that remained open following a fire in its restaurant. Similarly, the District Court in Royal Indem. Ins. Co. v. Mikob Properties, Inc., 940 F.Supp. 155, 159 (S.D.Tex.1996), relying on Texas law, found that where an insured never suspended operations in its buildings that had been adversely affected by a fire, there was no covered business interruption loss even though there had been a loss of income. In Keetch v. Mutual of Enumclaw Ins. Co., 66 Wash.App. 208, 212, 831 P.2d 784, 787 (1992), the court held that an insured could not recover business interruption insurance even though volcanic ash caused damage to a motel and reduced the quality of service provided, but never caused the motel to cease operations.
The Quality court also looked to the Second Circuit decision in National Children's Expositions Corp. v. Anchor Ins. Co., 279 F.2d 428, 431 (2d Cir.1960). There, the policy provided coverage for the use and "occupancy" of a building while the insured conducted a children's exposition. The insured claimed that losses resulting from reduced attendance caused by an unprecedented snowstorm should also be covered. The District Court denied the claim and the insured appealed. The Court of Appeals held that because the storm did not interrupt the use or occupancy of any part of the premises, and because the exposition was in fact held at all times during the period when policy provision was in force, there was no loss within the policy clause insuring "use and occupancy value" of the building against the elements.
Other cases in New York support this conclusion. In Howard Stores Corp. v. Foremost Ins. Co., 441 N.Y.S.2d. 674 (1st Dept. 1981) the insured, a clothing manufacturer, brought an action against its insurer for recovery of a business interruption loss resulting from water damage to one of its stores. Foremost initially denied Howard Stores's claim because the water damage to its inventory had not forced the store to suspend its retail business operation. Howard Stores did not actually close, but in order to compensate for the loss of inventory, it was forced to redirect inventory from other stores. Although Howard Stores did not show a documented loss, because of the insured loss it failed to meet anticipated earnings goals. The Supreme Court rendered judgment for Howard Stores and the insurer appealed. The Appellate Division held that where the insured did not cease operations and did not document an overall loss, but rather claimed a failure to meet projected increases in sales, the insured failed to meet burden of proving a business interruption loss.
In Quality the insured also argued that to require a complete cession of operations would encourage policyholders to unnecessarily shutdown business and thereby not mitigate damages. Michigan contended that the mitigation clause in the policy required a mitigation of damages by a "complete or partial resumption of operation of the property." Accordingly, any interpretation of the policy that required something less than a total suspension of business would render the mitigation clause meaningless. The Quality court referred to the decision in Keetch to support Michigan's interpretation. In Keetch, 66 Wash.App. at 210, 831 P.2d at 787, the court held that "[b]y requiring the insured to mitigate the loss and resume operations as soon as practicable, the endorsement implies that a business interruption loss has forced the insured to cease business operations."
In short, case law suggests that in order to present a compensable business interruption claim, an insured suffering a loss must actually cease operation as a direct consequence of an insured loss. Additionally, the insured is obligated under the terms of the policy to expeditiously resume operations, in whole or in part, as expeditiously as possible.
-Elisa T. Gilbert
EMPLOYER LIABILITY IN NEW YORK: A DISAPPEARING CONCEPT
-John F. Parker
-Alyssa DeSimone
For years New York maintained a workers' compensation system in which an employee would be awarded workers' compensation benefits for an injury occurring during the course of his employment. Because the employer funded the system, the employee was theoretically limited to recovery from the employer through this system alone. Simply put, the employer, as long as it participated in this system, could not be sued by the employee for an injury on the job.
Although the legislative intent behind this system was to eliminate double recovery from the employer, this intent was bypassed through impleader actions, in which the employer would not be sued directly by the employee but would be sued as a third-party defendant by one of the defendants (such as the manufacturer of an allegedly defective product or a property owner). In essence, the employer would often in effect end up paying twice. In such a situation, a workers' compensation carrier would frequently be quite flexible by waiving its workers' compensation lien in order to assist in settling a third party claim against the employer. This circumvention was of great value to the plaintiff as well as the other defendants, who then would have an extra pocket from which to seek contribution or indemnification.
In 1996, however, the Workers' Compensation Law of the State of New York was amended. Assembly Bill No. 11331 was signed by Governor Pataki on September 10, 1996. It reads:
An employer shall not be liable for contribution or indemnity to any third person based upon liability for injuries sustained by any such employee acting within the scope of his or her employment for such employer unless such third person proves through competent medical evidence that such employee has sustained a ‘grave injury' which shall mean only one or more of the following: death, permanent and total loss of use or amputation of an arm, leg, hand or foot, loss of multiple fingers, loss of multiple toes, paraplegia or quadriplegia, total and permanent blindness, total and permanent deafness, loss of nose, loss of ear, permanent and severe facial disfigurement, loss of an index finger or an acquired injury to the brain caused by external physical force resulting in permanent total disability (emphasis added).
This amendment dramatically altered the employer's exposure by limiting its liability to workers' compensation benefits, exclusive and in place of any other liability whatsoever. Because of certain broad language in the statute, however, much litigation has ensued since the enactment of the amendment.
TIMING OF THE AMENDMENT
The amendment was to take effect "immediately," but it did not specify whether it applied to previously pending third party actions against an employer. Thus, the first flurry of litigation focused primarily upon the effective date of this statute, and in particular whether it was to be applied prospectively or in a retroactive fashion.
In one of the first cases to address this issue, the court in Gleason v. Holman Contract Warehousing, Inc., 170 Misc.2d 668, 649 N.Y.S.2d 647 (N.Y. Sup. Ct. 1996), held that the amendment to section 11 of the Workers' Compensation Law was prospective only. The court reasoned that the language of the statute, i.e., that the act was to take effect "immediately", indicated a prospective intent, and the Act was silent as to any retroactive application. Furthermore, the court concluded that prospective intent was also suggested by the Legislatures's intent to "create a system" related to culpability and apportionment. In addition, the Act does not provide for redistribution of windfall profits to the workers compensation insurance carriers that would result from a retroactive application, and does not provide for return of premiums to businesses that paid them. Finally, the court reasoned, a retroactive application would not warm the business climate of New York and attract new business to the State.
In complete contradiction to that decision, other judges on the New York Supreme Court level ruled otherwise. For example, in Johnson v. Space Saver Corp., 172 Misc.2d 147, 656 N.Y.S.2d 715 (N.Y. Sup. Ct. 1997), the court held that the alternative remedy provision of the Act should be given retroactive application. Because the intent of the statute could not be gleaned from the language of the amendment itself, the court looked to other laws of the Workers' Compensation Act for guidance. Specifically, the court looked to the Act's audit provision, chapter 635, Section 88, which allows the Superintendent of Insurance to audit all licensed workers' compensation insurance carriers to determine the value of any reduction in their reserves that result from the application of the Act's provisions. The court found that the audit provision would be without meaning or effect if the alternative remedy provision were deemed prospective only. The court concluded that since the right to contribution is one that is neither vested nor beyond impairment by operation of other laws, there is no bar to the retroactive application of the amendment.
The New York Court of Appeals resolved the controversy in Majewski v. Broadalbin-Perth Central School District, 696 N.E.2d 978, 673 N.Y.S.2d 966, 91 N.Y.2d 577 (1998). The court ruled that the amendment applied prospectively to actions filed post-enactment. First, the court said that the starting point in any case of statutory interpretation must always be the statutory language itself, giving effect to the plain meaning thereof. The court also pointed out that the retroactive operation of a statute is generally not favored by courts, and that statutes will not be given such construction unless the language expressly or by necessary implication requires it. In concluding that the amendment is to be applied prospectively, the court reasoned that absent a clear expression of the legislative intent to make the law retroactive, there is a strong presumption that it should be prospective.
EXCEPTIONS TO THE AMENDMENT
Once this issue was resolved, litigators throughout New York turned their attention to creating loopholes in this amendment. Although the amendment specifically excludes third-party actions against an employer, there are certain limited exceptions, such as when an employer fails to secure the payment of workers' compensation benefits for his or her injured employee or the employer enters into a contract expressly agreeing to contribution to or indemnification of the claimant or the person asserting the cause of action. The other exception to the limited liability of the employer, which is the most controversial and has been the most highly debated, arises when it is proven through competent medical evidence that the employee sustained a "grave injury."
The bill creates a new system in which an employer is exposed to third-party liability only in cases involving narrowly defined "grave" injuries. Third-party liability can now only be imposed when requested by the primary defendant upon a showing by that primary defendant that the plaintiff seeks relief for a statutorily denominated and enumerated "grave injury". The grave injuries listed in the bill are deliberately both narrow and completely described. The list is exhaustive, not illustrative: it is not intended to be extended absent further legislative action. Memorandum filed with Assembly Bill Number 11331 (Sept. 10, 1996) (enacted). Despite the legislature's attempt to define narrowly the types of injuries that would fall within the exception to the statute, many "injuries" did not fit neatly into the categories set forth in the statute. Thus, the interpretation of certain injuries needed to be tested.
In determining whether a plaintiff's injury qualifies as such an exception, the courts have consistently placed the burden upon the employer to establish that the plaintiff has not suffered a "grave injury." Harris v. Metropolitan Life, 703 N.Y.S.2d 703 (N.Y. Sup. Ct. 2000). The opposing party is then compelled to raise a triable issue of fact through the submission of "competent medical evidence" to support its claim of "grave injury." Harris v. Metropolitan Life Insurance Co., supra.
Many Courts have followed the rationale set forth in the Bill Jacket by generally finding that an injury is "grave" only if it falls within the confines of the statute's very restrictive definition. Johnson v. Space Saver Corp., 172 Misc. 2d 147, 656 N.Y.S.2d 715 (N.Y. Sup. Ct. 1997). For example in Johnson, where plaintiff alleged that she was "rendered sick, sore, wounded and bruised about her body and limbs has suffered and will continue to suffer severe, permanent injuries to her head, neck, back, causing continuing physical pain, disability and mental anguish" as a result of a bookshelf falling on top of her at work, the court held that she did not suffer from a "grave injury" as defined in § 11. The Appellate Division, Fourth Department, in strictly interpreting this amendment, went so far as to hold in a case where a plaintiff sustained worksite injuries that required the complete amputation of his right ring finger, and partial amputation of his pinky finger, that to read the phrase "loss of multiple fingers" to mean, as the employer urged, a "total loss of multiple fingers" would be to render superfluous the word "total" selectively used before the phrase "loss of use ... of a ... hand." Banegaz v. F.L. Smithe Machine Co., Inc., 688 N.Y.S.2d 143 (4th Dep't 1999). The Court went on to state that had the legislature intended that the "loss of multiple fingers" must be "total" in order to qualify as a "grave injury", it would have used that word immediately before that phrase. Other Courts have also followed this rationale. Brownstein v. LeCroy Corp., 98 NYWCLR 2100 (N.Y. Sup. Ct. 1998) ("a displaced fracture of the wrist and a 35% loss of use thereof is not "total and permanent" and therefore does not qualify as a grave injury"); Hilbert v. Sahlen Packing Co., 701 N.Y.S.2d 564 (4th Dept. 1999) (submission of pictures of plaintiff's face demonstrated as a matter of law that the plaintiff did not sustain "permanent and severe facial disfigurement"); Jusino v. The Brio Manufacturing Co., Index No. 15447/97 (N.Y. Sup. Ct. 1998) (plaintiff maintained "some use of her index fingers" and thus same did not equate to a grave injury).
The Appellate Division, First Department, has quite recently chimed in rather loudly on this issue. In Barbieri v. Mt. Sinai Hospital, No. 2198, 2199, 2000 WL 280665 (N.Y. App. Div. March 14, 2000), a unanimous five-justice panel said that a carpenter who fell 30 feet when he stepped through an unmarked access panel did not suffer a "grave injury" within the meaning of the New York Workers' Compensation law. The panel, in an opinion written by Justice Peter Tom, said that neither permanent scarring on Mr. Barbieri's face nor cognitive losses claimed by the worker amounted to a "grave injury" within the meaning of the workers' compensation law. By enacting the amendment to the workers' compensation law, Justice Tom pointed out, the legislature acted to limit the practice by which injured workers could sue negligent third parties who could then seek recovery from employers. "The point of the statutory amendment was to abolish such third party actions and to restore a regime wherein workers' compensation was the exclusive remedy," Justice Tom said.
On the other hand, a completely different school of thought also exists. Though clearly in the minority, a handful of decisions have held that whether or not a plaintiff's injuries fall within the parameters of the "grave injury" exception is a question of fact that should be left to the finders of fact at trial. Zucker v. Sheridan, 179 Misc.2d 892, 686 N.Y.S.2d 611 (N.Y. Sup. Ct. 1999); Londono v. Hobart Corp., No. 98 Civ. 908, 1999 WL 185267 (S.D.N.Y. April 2, 1999). In Londono, a plaintiff's index finger was damaged and his middle finger had to be partially amputated as a result of a work related accident, and the court held that it "remains the province of the jury with respect to whether the evidence at trial demonstrates that a significant amputation, combined with a virtually complete loss, such that plaintiff should be considered to have suffered a ‘loss' of his index finger or multiple fingers was truly ‘grave'." Moreover, the court in Zucker v. Sheridan, went so far as to deny summary judgment to an employer in a similar situation although it had been conceded that the plaintiff did not suffer an injury specifically numerated in Section 11, finding that whether the injury falls within the parameters of Section 11 is a question of fact that ultimately should be left to the finders of fact.
CONCLUSION
As a result of the large number of cases that have strictly interpreted the "grave injury" exception, it has become increasingly more difficult in New York for a defendant to share the financial responsibility for an injury with a plaintiff's employer. Ultimately, however, it appears that until the Court of Appeals rules otherwise this exception must be put to the test on a case by case basis.
-John F. Parker
-Alyssa DeSimone
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