STATE OF NEW YORK
       ________________________________________________________________________
 
                                         3574
 
                              2001-2002 Regular Sessions
 
                    IN SENATE
 
                                    March 15, 2001
                                      ___________
 
       Introduced by Sen. VOLKER -- (at request of the Judiciary) -- read twice
         and ordered printed, and when printed to be committed to the Committee
         on Codes
 
       AN ACT to amend the civil practice law and rules, in relation to permit-
         ting  a  plaintiff  in  a  tort  case to recover against a third party
         defendant in certain cases when the third party plaintiff is insolvent
 
         The People of the State of New York, represented in Senate and  Assem-
       bly, do enact as follows:
 
    1    Section 1. The civil practice law and rules is amended by adding a new
    2  section 1405 to read as follows:
    3    §  1405.  Permitting  plaintiff  to  obtain  an indirect tort recovery
    4  against a third party defendant in  certain  cases.  Either  a  judgment
    5  creditor or a judgment debtor may recover on a judgment for contribution
    6  or  indemnification regardless of whether the judgment debtor has satis-
    7  fied the underlying judgment for which contribution  or  indemnification
    8  is  sought.  Where  such underlying judgment is unsatisfied, any payment
    9  made by the contributing or indemnifying party shall be made directly to
   10  the judgment creditor.
   11    § 2. This act shall take effect on  the  first  day  of  January  next
   12  succeeding the date on which it shall have become a law, and shall apply
   13  to actions commenced on or after such date.
 
 
 
 
        EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                             [ ] is old law to be omitted.
                                                                  LBD10208-02-1

 
BILL NUMBER: S3574
 
SPONSOR: VOLKER

AN ACT to amend the civil practice law and rules, in relation to permit-
ting a plaintiff in a tort case to recover against a third party defend-
ant in certain cases when the third party plaintiff is insolvent
 
This is one of a series of measures being introduced at the request of
the Chief Administrative Judge on the recommendation of his Advisory
Committee on Civil Practice. It would add a new CPLR 1405 expressly to
permit a plaintiff in a tort case to recover directly against a third-
party defendant found liable to the defendant/third-party plaintiff,
where the latter is insolvent.
 
We propose this measure to clarify New York law, which, in the caselaw,
appears somewhat uncertain at this time. See, Klinger v.  Dudley, 41
NY2d 362 (1977); Feldman v. NYC Health and Hospitals Corp., 56 NY2d 1011
(1982); Reich v. Manhattan Boiler & Equipment Corp., 91 NY2d 772
(1998).{1}
 
Our Committee believes that plaintiff's recovery of a judgment that
ultimately comes from a third-party defendant should not depend on the
fortuity of the solvency of the third-party plaintiff.  Accordingly,
this measure would allow plaintiff to recover on a judgment for contrib-
ution against the third-party defendant, whether or not the
defendant/third-party plaintiff has satisfied the underlying judgment
for which contribution or indemnification is sought. Thus, in the case
where a defendant/third-party plaintiff, directly liable to the plain-
tiff, is insolvent and is unable to pay the judgment, the plaintiff will
recover that portion of the judgment owed by the third-party defendant
from that party directly.
 
Importantly, this measure would not alter in any way the substantive law
of workers' compensation. The 1996 Omnibus Workers' Compensation Reform
Act already limits claims for contribution and indemnification against
an employer to only those cases involving "grave injuries."  In cases
where there are not grave injuries, the employer is not liable as a
matter of substantive law, and therefore this measure would not affect
such employers at all.{2}
 
This measure, which would have no fiscal impact on the State, would take
effect on the first day of January next succeeding the date on which it
shall have become law, and shall apply only to actions commenced on or
after that date.
 
 
1999-00 LEGISLATIVE HISTORY:  OCA 2000-160
 
Assembly 10422 (Weinstein, Ortiz)  
3rd Reading
 
{1}The first of these cases, Klinger, barred a recovery by a plaintiff
against a third—party defendant found liable for a portion of the
damages owed plaintiff by the original defendant, where the original
defendant was insolvent. The court required the judgment, or at least
the original defendant's proportionate share, to be paid in full before
this could happen. Several years later, however, the Feldman court
permitted a circumventive loan to get around the problem where the
third—party defendant was not an employer. More recently, in Reich, the
court held such a loan device to be ineffective when the third—party
defendant was an employer, stating that such a loan agreement would
conflict with public policy considerations that mandate exclusivity of
the workers' compensation remedy.
 
{2}By contrast, in those cases involving grave injury, the Legislature
has made a policy determination that the employer should be subject to
potential third—party liability. This measure would help give effect to
that determination.