Court recognized that it was sacrificing the certainty of the old rule for "the more just, fair and practical result that may best be achieved by giving controlling effect to the law of the jurisdiction which has the greatest concern with, or interest in, the specific issue raised in the litigation." Id.
Thereafter, in Cooney v. Osgood Machinery, Inc., 81 N.Y.2d 66, 595 N.Y.S.2d 919, 612 N.E.2d 277 (1993), a distinction was recognized between "laws that regulate primary conduct (such as standards of care) and those that allocate losses after the tort occurs (such as vicarious liability rules). If conflicting conduct-regulating laws are at issue, the law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders. But if competing 'postevent remedial rules' are at stake other factors are taken into consideration, chiefly the parties' domiciles." Cooney, 81 N.Y.2d at 72.
"Contribution rules--as involved in the present case-- are loss allocating, not conduct regulating." Id. at 74. Thus, in the present case in which ATH is seeking contribution and/or indemnity from Boewe-Passat, factors in addition to the locus of the tort must be considered.
Although New York is the place where the accident occurred, I believe that other factors compel the conclusion that Texas law, and not New York law, applies as to whether the third-party action may be maintained. Both plaintiff and the third-party defendant, plaintiff's employer, are from Texas. Clearly Texas law precludes an action against Boewe-Passat. Prior to 1996, New York's law concerning contribution conflicted with Texas law. However, that conflict no longer exists. In 1996, New York's Worker's Compensation Law, § 11, was amended and now bars claims for indemnity and contribution unless it is established by competent medical evidence that the employee suffered a "grave injury." In this case, ATH does not contend that plaintiff did, in fact, sustain a "grave injury" as defined by the statute. Rather, ATH contends that the change in New York's Worker's Compensation Law should not affect this action since the injury occurred and the action was commenced prior to the legislative change. I do not believe that this argument is persuasive. The issue is whether New York now has a sufficient interest in the matter that its law should apply instead of the law of Texas.
If New York law now allowed for indemnity actions, without reservation, perhaps the conflict would be resolved in favor of the jurisdiction where the accident occurred. This was what the court did in Cooney, a case heavily relied on by ATH here. Cooney, however, is not controlling, principally because of the change in New York's compensation law.
Thus, while Cooney found that New York had a substantial interest in allowing a defendant who pays more than its fair share of a judgment to seek contribution from other responsible tortfeasors,
that interest no longer exists in light of the change in the law. Regardless of whether the amendment can be applied retroactively, it cannot be said that New York now has a continuing interest in applying its previous law subjecting an employer to third-party actions for contribution or indemnification, particularly where the employee did not suffer a "grave injury."
The decision of Texas, on the other hand, "to shield employers from contribution claims is ... a policy choice implicating significant State interests: 'to deny a person the immunity granted ... by a worker's compensation statute of a given state would frustrate the efforts of that state to restrict the cost of industrial accidents and to afford a fair basis for predicting what these costs will be.'" Cooney, 81 N.Y.2d at 75, quoting Restatement [Second] of Conflict of Laws § 184, comment b, at 547. For another State "to subject a person who has been held liable in worker's compensation to further unlimited liability in tort or wrongful death would frustrate the worker's compensation policy of the State in which the award was rendered." Id. at 75-76, quoting Restatement [Second] of Conflict of Laws § 183, comment c, at 544. New York's interest in the loss allocation is now sufficiently attenuated that Texas law must control.
Because Texas has a significant interest in having its workers' compensation laws applied in matters involving a Texas employee and his employer and because New York does not have a significant interest in the case, I find that Texas law applies to the validity of this third-party action.
Since Texas law protects employers from third-party actions for contribution and/or indemnification, ATH's claim against Boewe-Passat for contribution and/or indemnification must be dismissed.
Texas Fund's Motion to Intervene
Texas Fund moves to intervene as of right in the above-entitled action pursuant to Fed.R.Civ.Pro. 24(a)(2), which provides in part:
Upon timely application anyone shall be permitted to intervene in an action...(2) when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties."
Intervention as of right requires the applicant to establish four elements: (1) that a timely application has been made, (2) that the moving party has an interest in the subject matter of the litigation, (3) that disposition of the action impairs or impedes the moving party's ability to protect its interest, and (4) that the movant's interest is not adequately protected by the existing parties. American Lung Ass'n v. Reilly, 962 F.2d 258, 261 (2d Cir. 1992); Washington Elec. Co-op., Inc. v. Massachusetts Municipal Wholesale Elec. Co., 922 F.2d 92, 96 (2d Cir. 1990).
It cannot be disputed that Texas Fund has an interest in the subject matter of this litigation. To date, Texas Fund has paid over $ 46,000 to Carnley pursuant to Texas Workers' Compensation laws for loss of income and medical expenses. The only basis for Carnley's opposition to the motion is that it is unnecessary for Texas Fund to intervene since by law it already has a lien on any proceeds arising out of this litigation.
It is clear that Texas Fund is not required to intervene in this action to protect its interest. Under Texas law,
a carrier's right to reimbursement of workers' compensation benefits paid to a plaintiff in an action against a third-party is not dependent on the carrier's intervention in the action. Rockwood Ins. Co. v. Williamson, 596 F. Supp. 1524, 1527 (N.D.Texas 1984).
Courts interpreting the Texas Workers' Compensation Law have found that "the language is clear that the workmen's compensation carrier can recoup the monies paid to an injured employee from any recovery against a negligent third party." Rockwood, supra at 1527.
However, the fact that Texas Fund is not required to intervene does not necessarily lead to the conclusion that it is prohibited from doing so. Texas Fund has a legitimate interest in the case and it is in a much better position to protect that interest than any of the other parties. Texas Fund is entitled to intervene in the action to protect its legitimate interests. I foresee no harm or prejudice to any of the other parties by virtue of this intervention. Texas Fund's intervention in the lawsuit would have little effect on how the case is actually prosecuted before a jury and affects no substantial interest of any of the other parties.
Other courts, faced with identical or very similar circumstances, have held that an insurance carrier may intervene as of right in an action brought by the injured party against a third-party tortfeasor. See Smith Petroleum Service, Inc. v. Monsanto Chemical Co., 420 F.2d 1103 (5th Cir. 1970)(holding that carrier was entitled to intervene as of right where the state's worker's compensation law permitted subrogation of a compensation carrier); Curtis v. Sears, Roebuck & Co., 754 F.2d 781, 783 (8th Cir. 1985)(no fault insurance carrier allowed to intervene as of right to assert statutory lien in action between injured person and third-party tortfeasor); Black v. Texas Employers Ins. Assoc., 326 F.2d 603, 604 (10th Cir. 1964)("If subrogated, a compensation carrier may intervene in an action as a matter of right..."). But see Schultz v. Connery, 863 F.2d 551 (7th Cir. 1988)("Because [the insurer's] right to reimbursement in no way depends on whether it was a party to the lawsuit, [the court] concluded that [the insurer] ... failed to establish the likelihood of prejudice if its motion to intervene is denied.").
Thus, I find that Texas Fund has satisfied the requirements of Fed.R.Civ.Pro. 24(a)(2) and is entitled to intervene as of right.
The motion for summary judgment brought by third-party defendant Boewe-Passat Drycleaning & Laundry Machinery Corp. is granted. The third-party complaint against Boewe-Passat Drycleaning & Laundry Machinery Corp. is hereby dismissed. Texas Fund's motion to intervene is granted.
IT IS SO ORDERED.
DAVID G. LARIMER
UNITED STATES DISTRICT COURT
Dated: Rochester, New York
August 28, 1997.