New York Civil Law

New York Court of Appeals Will Hear Appeal on Applicability of Business Corporation Law § 630 to Foreign Corporations/Personal Exposure of a Corporation’s 10 Largest Shareholders

Stuto v. Kerber (Motion for leave granted on Feb. 15, 2011) 77 A.D.3d 1233 (3d Dep’t 2010)

This appeal will not only offer an analysis of Business Corporation Law § 630, it will likely also provide practitioners with a good explanation of legislative history and the interpretation of statutes. In Stuto, the plaintiff worked for the defendant, which was a defunct closely-held foreign corporation incorporated in Delaware. The plaintiff obtained a judge in Supreme Court, Albany County against the defendant based on a claim for unpaid wages. Thereafter, the plaintiff commenced the action at hand against three of the 10 largest shareholders of the defendant corporation. Supreme Court granted the defendants’ motion to dismiss the plaintiff’s complaint, holding that Business Corporation Law § 630 did not apply to foreign corporations.

The Third Department upheld Supreme Court’s dismissal, observing that section 630 “is essentially the reenactment of former Stock Corporation Law § 71 and provides that ‘[t]he [10] largest shareholders’ of a nonpublicly traded company ‘shall jointly and severally be personally liable for all debts, wages or salaries due and owing to any of its laborers, servants or employees other than contractors, for services performed by them for such corporation.” Notably, the Third Department pointed out that the former Stock Corporation Law § 71 did not apply to foreign corporations. As such, the Third Department noted that the legislative history of a particular enactment must be reviewed in light of the existing decision law which the Legislature is presumed to be familiar with and to the extent it left it unchanged, that it accepted.

The Court of Appeals will determine whether Business Corporation Law § 630 applies to foreign corporations.

 

New York Court of Appeals Hears Oral Argument on Sole Proximate Cause within Labor Law sec. 240(1) Context

The New York Court of Appeals just yesterday heard oral arguments in Gallagher v. New York Post, which concerns an issue of the sole proximate cause defense within the Labor Law context.  In Gallagher, the plaintiff injured worker fell into an opening in decking floor after the blade of a circular cut-off saw he was using became bound up in steel decking that he was cutting.  The plaintiffs moved for summary judgment on the issue of liability on their Labor Law sec. 240(1) cause of action.

The Appellate Division, First Department Majority held that the trial court properly denied the plaintiffs' motion because material issues of fact existed on whether the worker chose not to use an available safety device.  The Majority held that the evidence proffered in opposition to motion demonstrated more than "[m]ere generic statements of the availability of safety devices."  The Majority hinged this conclusion on the testimony of the worker's employer's assistant project manager, who stated that (1) he had weekly meetings with the safety specialist hired to oversee the construction project in question; (2) the ironworkers were required to use certain safety devices, such as lanyards, cables or harnesses, when working near open areas; (3) the devices were used to prevent injury in case a worker fell through an opening or off an elevated surface; (4) the safety devices were available on the job site the day the worker was injured; and (5) a standing order was in place that all workers operating around any opening in the floor were to be in a harness and tied off.

Justice Catterson, with Justice Moskowtiz joining, dissented in part and concluded that the motion should have been granted because no triable issues of fact existed regarding whether the requisite safety equipment was made available and, if so, whether the injured worker chose not to make use of it.  Justice Catterson observed that no evidence existed in the record that the worker chose not to use an available safety device.  He reasoned that every worker except the worker's employer's assistant project manager testified that no safety devices were provided to the ironworkers.  Justice Catterson pointed out that the assistant project manager's testimony did not state that the worker was told to use certain safety devices and that he declined and that he had "no good reason not to do so."

The Court of Appeals' decision will likely provide more clarification to its holdings in Montgomery v. Federal Express Corp., Cahill v. Triborough Bridge & Tunnel Auth., and Blake v. Neighborhood Hous. Servs. of N.Y. 

New York Civil Law will keep you apprised of the Court's decision.

New York Senate Considering Bill on Collateral Sources that Helps Plaintiffs and Defendants Reach Settlement

Have you had to perform the collateral source dance as a plaintiff's and defense attorney?  The parties are ready to settle but that inevitable lien puts a halt on negotiations because plaintiff's attorney wants to protect his or her client and the defense attorney doesn't want his or her client to be exposed to liability from the lienholder.

The New York Senate has referred A8114-A to its Rules Committee (see text of Bill and other information on it here: Download SCAN_35301050_000.pdf ), as the New York Assembly has passed the bill.  The bill addresses the impact of collateral source payments upon  tort claims  for  personal injury,  property  damage or wrongful death, and upon related subrogation claims.  It is worth reading the Bill's language; however, the crux of the Bill is that where the parties negotiate a settlement, it is assumed that the plaintiff has not settled in derogation of the contract between the lien-holder, and the defendant will not be subject to reimbursement for a claim from a collateral source payor, unless that payor has a statutory right to do so (i.e., a workers' compensation lien).  The Bill also addresses how collateral sources are handled where the action goes to verdict.

Notably, this Bill is one in a series of measures being introduced at the request of  the Chief Administrative Judge upon the recommendation of his Advisory Committee on Civil Practice.  Its sponsor is Kenneth Zebrowski.

New Bill Passed On City and District Court Practice - Effective Tomorrow, September 8, 2005

Effective September 8, 2005 (30 days from when Governor Pataki signed the bill), chapter 452 (see bill here: Download SCAN_35301006_000.pdf ) will go into effect, amending the New York City Civil Court Act, the Uniform District Court Act and the Uniform City Court Act, in relation to the method of commencing and filing a lawsuit.

Under chapter 452, the New York City Civil Court Act, the Uniform District Court Act and the Uniform City Court Act are amended to provide that an action is commenced by filing a summons and complaint, and a special proceeding is commenced by filing a notice of petition and petition (or order to show cause and petition).  New York's Insurance Law (sec. 5106(d)) and Workers' Compensation Law (sec. 142(7)) are also amended to provide expedited forum on whether an accident occur ed during the course of employment (Workers' Compensation Law) and an expedited eligibility hearing in a multi-carrier situation, to designate the insurer for first party benefits.