Miraglia v. H & L Holding Corp.

McGuire, J.,

concurs in a separate memorandum as follows: Lane & Sons Construction Corp. seeks leave to reargue its appeal. Alternatively, it seeks leave to appeal to the Court of Appeals. While I agree with the majority that reargument should be granted and leave to appeal should be denied, a brief discussion of both motions is warranted.

Flaintiff was injured while working on a construction project on property owned by defendant H & L Holding Corp. (306 AD2d 58 [2003]). Flaintiff commenced a personal injury action against H & L, which subsequently impleaded Lane, plaintiffs employer. H & L was granted summary judgment on its claim for indemnification against Lane, and Lane assumed defense of the main action.

After a jury trial, H & L was found liable for plaintiffs injuries and plaintiff was awarded damages. The judgment, however, permitted plaintiff to recover the damages from H & L (the defendant in the main action) and Lane (the defendant in the third-party action). On defendant Lane’s appeal from the judgment, we modified the judgment to the extent of, inter alia, setting aside the award for future pain and suffering unless plaintiff stipulated to reduce the award (36 AD3d 456 [2007], lv *516denied 10 NY3d 703 [2008]). Lane did not argue on that appeal that it was not liable to plaintiff but only to H & L.

Plaintiff stipulated to reduce the awards and sought to settle the amended judgment. The proposed amended judgment, like the original judgment, allowed plaintiff to recover from both H & L and Lane. Lane objected to the proposed amended judgment and offered another amended judgment, one that permitted plaintiff to recover only from H & L. Lane then moved to amend the original judgment to reflect that plaintiff could only recover from H & L; plaintiff sought entry of the amended judgment that he had proposed. Supreme Court denied Lane’s motion to amend the original judgment and signed plaintiff’s proposed amended judgment.

We affirmed the order denying Lane’s motion and permitting plaintiff to enter his amended judgment. We stated

“After the 2007 appeal, [Lane] asserted for the first time that since it was plaintiffs employer, the court could not enter a judgment in which plaintiff was granted a right to recover directly against it because the worker’s compensation paid to plaintiff was his exclusive remedy. The first judgment, affirmed in the 2007 appeal except for future pain and suffering damages (for which plaintiff stipulated to a reduction), also provided plaintiff with a direct recovery against third-party defendant, which failed to raise any objection based on worker’s compensation exclusivity at that time.
“A defense of worker’s compensation exclusivity is waived if the employer ignores the issue to the point of final disposition itself, especially where belated assertion of the defense will prejudice the party opposing the assertion. Here, not only did [Lane] fail to raise this objection to the judgment on the 2007 appeal, but it assumed defense of [H & L] at trial, after the latter had successfully moved in limine for contractual indemnification while instructing its accountant—unbeknownst to plaintiff—to file for dissolution. Plaintiff was thus denied the opportunity to object to [Lane’s] representation of [H & L] while reserving its worker’s compensation exclusivity defense, or to otherwise protect his position. This is unacceptable. Worker’s- compensation exclusivity is important as a matter of state public policy, but so is the finality of the result when a party charts its own course.
“It does not avail [Lane] to assert that it could not have waived this argument because it goes to jurisdiction. While lack of subject matter jurisdiction can be raised at any time, it is still within a New York court’s power to entertain the case before it. Here, [Lane] is not arguing that Supreme Court never had *517power to hear a particular type of proceeding in the first place. Waiver of an argument will be recognized where, as here, the court had jurisdiction of the general subject matter but a contention is made after judgment that the court did not have power to act in the particular case or as to a particular question in the case. Nor is [Lane] persuasive in arguing—for the first time on appeal—that Supreme Court lacked personal jurisdiction over it. Supreme Court has always had the power to render an adjudication over [Lane], which surely would not have assumed the defense of [H & L] at trial if it believed the court lacked personal jurisdiction over it” (60 AD3d 407, 407-408 [2009] [internal quotation marks and citations omitted]).

Lane now argues that we misapprehended the facts and the law in deciding its appeal because we focused on whether it had waived any argument that plaintiff could not recover against it because of the exclusivity provision of Workers’ Compensation Law § 11. Lane asserts that its argument supporting amending the original judgment was that it could not be liable to plaintiff because it was never a defendant in the main action—Lane was impleaded by H & L and was only a third-party defendant. Because it was never a defendant in the main action, Lane argues that no judgment could be entered in plaintiffs favor against it, and that it is liable only to H & L for indemnification.

I agree with Lane that we misapprehended the material issue on its appeal from the order denying its motion to amend the original judgment and permitting plaintiff to enter his amended judgment. We did indeed focus on the issue of whether Lane waived the defense afforded by Workers’ Compensation Law § 11. We should have focused instead on whether Lane, a third-party defendant, could be held directly liable to plaintiff despite the fact that Lane was never a defendant in the main action. Even assuming we were correct in stating that plaintiff was prejudiced by being denied the opportunity to object to Lane’s representation of H & L, we missed the mark in discussing the point.

Lane’s position finds support in Klinger v Dudley (41 NY2d 362 [1977]), where the Court of Appeals determined that the plaintiffs in the main actions could not recover from a third-party defendant against whom the plaintiffs did not assert any claims. The case before us is distinguishable from Klinger, however, because the third-party defendants in Klinger raised the argument that they were not liable to the plaintiffs on the appeals from the judgments. Here, Lane, on its appeal from the judgment, did not raise the argument that it is not liable to *518plaintiff because plaintiff asserted no claims against it. Rather, Lane raised that argument for the first time on a motion to amend the judgment after this Court had remanded for merely a reduction in the award for future pain and suffering or a trial solely on the issue of future pain and suffering. Thus, the order denying Lane’s motion to amend the original judgment should be affirmed on the ground that Lane waived that argument by not raising it on the appeal from the judgment.

Whether the rule in Klinger should be expanded to permit a third-party defendant to raise the argument at any time and whether the defense afforded by Klinger is one that cannot be waived are issues that the Court of Appeals can address if it wishes, as our order deciding this appeal is “final” under CPLR 5611 and thus the Court of Appeals can grant leave if it sees fit (see CPLR 5602 [a] [1] [i]).

Reargument granted and, upon reargument, the decision and order of this Court entered on March 3, 2009 (60 AD3d 407 [2009]) recalled and vacated and a new decision and order substituted therefor; leave to appeal to the Court of Appeals denied. [Prior Case History: 17 Misc 3d 852.]