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SLIPPERY STAIRS AND THE LABOR LAW: NEW GUIDANCE, 

By Arthur P. Xanthos

Defense counsel and carriers should be aware of the recent Court of Appeals pronouncement on Labor Law 240(1) cases, particularly because this latest pronouncement provides a roadmap for defeating plaintiffs’ common stratagem – the summary judgment motion.

The decision is O'Brien v Port Auth. of N.Y. & N.J., 2017 N.Y. LEXIS 725, 2017 NY Slip Op 02466 (N.Y. Mar. 30, 2017) The facts have been seen many times:  Plaintiff working on construction site, while descending an exterior temporary scaffold staircase which was wet and slippery due to rain, slips and falls thereby injuring himself.  Plaintiff sues all relevant parties and the focus of the complaint is Labor Law 240(1).

Plaintiff made the traditional summary judgment motion, supported by an expert affidavit from a professional engineer who opined that the stairs were "not in compliance with good and accepted standards of construction site safety and practice", that slippery conditions on stairways should be eliminated before use, and that the stairs in question were smaller, narrower, more worn, and steeper than typical stairs.  The expert concluded that these conditions coupled with the fact that the stairs were wet due to rain created a dangerous condition that was not in compliance with good and accepted standards of construction site safety and created a significant risk of slipping on the stairs and of thus falling down the stairs.
In opposition, defendants submitted affidavits from a construction safety expert, who disagreed with plaintiff’s expert, and opined that the staircase was designed for both indoor and outdoor use and provided traction acceptable within industry standards and practice in times of inclement weather. He further disagreed that the steps were too narrow, or that the step treads had been worn down.  He noted that the staircase provided both perforated holes to allow rain to pass through and raised metal nubs for traction.  He concluded that these anti-slip measures were sufficient. The defendants’ expert also opined that the use of both handrails could have helped prevent plaintiff's fall.
Not surprisingly, the lower court and the appellate division ruled in favor of the plaintiff on the motion.  The Court of Appeals, however, reversed plaintiff’s summary judgment award.  The Court’s primary rationale was the following:  the mere fact a plaintiff falls from a height on a construction site does not give rise to automatic Labor Law 240(1) liability, and where the defendants raise questions of fact as to whether a safety device (in the O’Briencase, the staircase) provided adequate protection to the plaintiff, summary judgment is not warranted.

While this decision and rationale is not a technical rewrite of Labor Law 240(1), it does mark a sea change in what presumptions the lower courts should make in analyzing these motions.  Heretofore, the process with some exceptions has been maddeningly difficult for the defense, because once a court heard that a plaintiff had fallen from a height and was injured, the court presumed – regardless of contradicting expert affidavits -- that inadequate safety devices were in place.  In other words, courts have been utilizing the fact of the fall to impose automatic liability. 

O’Brien counsels the courts against making that presumption.

                                                     -APX 5/26/17



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Arbitrating Indemnity Issues During the Pendency of a Supreme Court Action, by Arthur Xanthos

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Our last article warned of a pitfall with the traditional arbitration clause - ‎an arbitrator may end up with a power (e.g., the power to award punitive damages) that was never intended by the parties. Here we highlight another arbitration issue that has arisen several times in our practice.

Assume an Owner (O) hires a General Contractor (GC) to do work on a construction site, and the standard AIA form contract is executed containing a mandatory arbitration clause providing that "all disputes between the parties arising out of this agreement shall be resolved by binding arbitration under then applicable commercial arbitration rules". Plaintiff-worker (P) trips and falls while working on the site and sues both O and GC, alleging ‎negligence, as well as violations of the New York State Labor Law (the "Lawsuit"). O and GC each answer the Lawsuit and assert cross-claims against each other for contribution, defense, and indemnification.

All of the above is standard fare and occurs almost reflexively. But then something unusual happens: O's counsel files an arbitration demand, demanding that ‎GC arbitrate the issue of whether GC owes O defense and indemnification in the Lawsuit (the "Arbitration"). Inter-defendant arbitration of an indemnity obligation in the context of a pending personal injury lawsuit is an unusual tactic, and raises a host of procedural problems. For example, what happens to the rest of the case as the arbitration proceeds? What if the arbitration requires the resolution of other issues that have not yet been decided by the court? What if the arbitration takes the case beyond “standards and goals”? New York courts have come up with methods of dealing with the procedural problems. See, e.g., Weiss v Nath, 97 A.D.3d 661, 664 (2d Dep't 2012); County Glass & Metal Installers, Inc. v. Pavarini McGovern, LLC, 65 A.D.3d 940, 940-941 (1st Dep't 2009); and 624 Art Holdings, LLC v. Berry-Hill Galleries, Inc., 2012 N.Y. Misc. LEXIS 6440, 26-27 (N.Y. Sup. Ct. June 7, 2012). But even assuming counsel is willing to navigate the attendant procedural problems, in our opinion inter-defendant Arbitration of part of a Supreme Court action can only be justified in one of two circumstances:

1. Where a quicker resolution of the indemnity issue would occur in the Arbitration as opposed to the Lawsuit, and that speed is worth the arbitration fees; and/or
2. Where a more favorable resolution of the indemnity issue would occur in the Arbitration as opposed to the Lawsuit.

It is likely that New York counsel always will conclude that a quicker resolution would occur in the Arbitration. Counsel could also conclude that a more favorable resolution would occur in the Arbitration under the following scenarios:

1. If the rules applicable to the Arbitration (but not applicable to the Lawsuit) generate a better result -- of course then Arbitration would be advisable. But to make this decision counsel must retrieve the applicable Arbitration rules, review them for application to the indemnity issue, and compare the result with that obtained via the Lawsuit.
2. If the particular arbitrator used comes from a construction background and therefore knows or “feels” that such indemnity obligations should regularly be enforced -- here too Arbitration would be advisable.

So the conclusions are these: If the Arbitration would yield a more favorable result, choose inter-defendant arbitration regardless of the fees for arbitration. If the arbitration would yield a quicker result, and a result no worse than that yielded in Supreme Court, choose to arbitrate if you are willing to pay the cost to arbitrate in exchange for a speedier decision. In all other cases, bide your time and wait for the assigned Justice to make the decision on summary judgment.

APX 10/8/14
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Pre-Loss Risk Management Meetings with Insureds, by Arthur Xanthos

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Liability insurance carriers have several methods of managing the risk posed by their insureds' operations. One little used but very effective technique is the pre-loss risk management meeting between the insured and the carrier, or between the insured and an attorney hired by the carrier.

 In the case of a general contractor ("GC")insured, the procedure runs generally as follows: a GC that intends to develop land purchases a general liability insurance policy from an insurance carrier. As part of the insurance binder, the GC is obligated to meet with an attorney to review the subcontract agreements used by the GC, and to review the safety of its operations. (The carrier if it wishes can charge the GC a sum in addition to the premium to cover the cost of the meeting.) The meeting is then held between the attorney and the GC, during which subcontracts and insurance certificates are reviewed, and safety measures on the construction site are looked at (particularly those that might trigger New York State Labor Law liability). The attorney then makes suggestions to improve the GC's paperwork and its safety measures.

Rather than rewriting the insured's subcontracts entirely (an expensive, and likely vain pursuit), the attorney will want to leverage the time spent by focusing on three areas during the meeting with the insured: (1) the quality of the indemnity language in the insured's subcontracts; (2) the accuracy and proper wording of any insurance certificates from the subcontractors; and (3) the responsibility for safety on the construction site. It is these three areas that will pay the most dividends in the event of a loss.

In our experience conducting risk management meetings, not more than half of the contractor insureds we meet have both a valid indemnification provision in their favor, and a properly drafted insurance certificate from their subcontractors. Following a well run risk management meeting, however, the insured's subcontracts will have a valid and unambiguous indemnification clause running in favor of the insured, the insured's subcontractors will have made the insured an additional insured on the subcontractor's liability insurance policy, the insured will have received a tutorial on the strict safety rules applicable to owners and contractors on a construction site, and the carrier's adjustment of a future claim will be a matter of passing the defense and indemnity of the insured to the subcontractor and its insurance carrier.

So a proper risk management meeting will benefit both carrier and insured. For these reasons, all general liability insurance carriers should consider utilizing risk management meetings. Four points, however, should be kept in mind: (1) the insured is not always receptive to such meetings, even if the insurance binder requires it. Consequently, you will find that the meeting often takes place long after the insured starts work on the site; (2) you are counting on the insured taking the advice of the attorney. There is little recourse, however, if the insured does not do so (other than perhaps a non-renewal of the policy); (3) it is not a requirement that an attorney conduct these meetings -- an experienced adjuster can be just as effective; and (4) the average time to prepare for and conduct the meeting is six hours. The amount charged to the insured, if any, should reflect that anticipated cost.

                                                                                                          -APX 2/14/14
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