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NATIONAL CAS. CO. v. CITY OF POUGHKEEPSIE

February 18, 1993

NATIONAL CASUALTY COMPANY, Plaintiff,
v.
CITY OF POUGHKEEPSIE, Defendant.



The opinion of the court was delivered by: VINCENT L. BRODERICK

 VINCENT L. BRODERICK, U.S.D.J.

 I

 National Casualty Company ("the insurer"), plaintiff here, had issued an insurance policy to the City. The insurer seeks summary judgment declaring that its policy does not cover the City for liability of this kind: it relies upon exclusions in the policy which were allegedly triggered by the identity of the tort plaintiff as a City police officer, and upon the fact that the injuries were covered by workers' compensation.

 The City does not contest the insurer's position that declaratory judgment pursuant to 28 USC §§ 2201, 2202 would be in the interest of both parties by establishing greater certainty in their legal relations. See Continental Casualty Co. v. Coastal Savings Bank, 977 F.2d 734 (2d Cir., 1992). Instead, the City, in turn, has moved for summary judgment seeking a declaration that under the policy the insurer is responsible for any recovery obtained by the County against the City growing out of the injuries to the police officer.

 I grant the City's application for summary judgment.

 II

 Workers' compensation is designed to provide employees with limited financial protection without regard to fault against the consequences of job-related injuries. Employers pay for workers' compensation, and that payment is deemed part of the cost of doing business; the employers are by law then insulated from tort liability to their employees for such job-related injuries. This historic trade-off is outflanked where employees are able to sue third parties who in turn can implead the employer, which thus becomes liable in tort for amounts indirectly flowing from employee injuries covered by compensation.

 The problem is difficult and intractable. Workers' compensations laws do not deny employees the right to sue third parties who injure them, and legislatures do not seem to have yet considered imposing restraint in this area. Once a third party is sued, it is difficult and appears counter to natural justice to deny that party a right to claim over against anyone else, including the employer, who may be primarily or partially responsible for the injury.

 In this diversity of citizenship case, New York State law is applicable. *fn1" New York legislators have enacted exceptions to the exclusivity of workers' compensation in specialized situations such as the construction industry, permitting recovery of tort damages against employers failing to provide safe workplaces under circumstances defined in specific statutes such as New York Labor Law §§ 200, 240 and 241. See generally Adkins v. Trezins, 920 F.2d 164 (2d Cir. 1990); Dole v. Dow Chemical Co., 30 N.Y.2d 143, 282 N.E.2d 288, 331 N.Y.S.2d 382 (1972). While the existence of such legislation in specific areas may indicate a disposition to respect exclusivity in other contexts, it does not provide an avenue for doing so.

 Thus insurers and their policyholders are at sea concerning how risks of duplicate costs, allocable to workers' compensation and tort recoveries, can be avoided or allocated. It is important that if there is to be an avoidance or allocation of such duplicate costs, it be effected consistently with state statutory and case law which reflects concern with the need to deter unsafe practices on the part of employers. *fn2"

 I conclude that this problem cannot be resolved by expansive construction of exclusions in insurance policies, such as that at issue in the present case, which do not by their terms exclude ...


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