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Miraglia v. H & L Holding Corp.

Supreme Court of New York, Appellate Division, First Department

November 17, 2009

Frank Miraglia, Plaintiff-Respondent-Appellant,
H & L Holding Corp., Defendant/Third-Party Plaintiff, Lane & Sons Construction Corp., Third-Party Defendant- Appellant-Respondent.

Mauro Goldberg & Lilling LLP, Great Neck Matthew W. Naparty of counsel, for appellant-respondent.

Pollack, Pollack, Isaac & DeCicco, Brian J. Isaac of counsel, for respondent-appellant.

Gonzalez, P.J., Mazzarelli, Sweeny, McGuire, DeGrasse, JJ.

Order, Supreme Court, Bronx County (George D. Salerno, J.), entered October 9, 2007, which, to the extent appealed from as limited by the briefs, denied third-party defendant's motion for an amended judgment providing recovery by plaintiff only from defendant, and amended judgment, same court and Justice, entered October 29, 2007, awarding plaintiff damages against both defendant and third-party defendant in the principal amount of $18,097,112.15, affirmed, without costs.

Plaintiff was employed by third-party defendant contractor. As noted on prior appeals (306 A.D.2d 58 [2003]; 36 A.D.3d 456 [2007], lv denied 10 N.Y.3d 703), he was working on a residential structure on land owned by defendant when he fell from planks used to span a trench and provide access to foundation walls, and was impaled by a steel bar from the scrotum to L2 on his spinal cord, resulting in paraplegia and associated complications. In a separate action, plaintiff recovered over $6 million from defendant's insurer, with defendant retaining the right to contractual indemnification.

After the 2007 appeal, third-party defendant asserted for the first time that since it was plaintiff's 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" (Murray v. City of New York, 43 N.Y.2d 400, 407 [1977]), especially where belated assertion of the defense will prejudice the party opposing the assertion (see Shine v. Duncan Petroleum Transp., 60 N.Y.2d 22, 27-28 [1983]). Here, not only did third-party defendant fail to raise this objection to the judgment on the 2007 appeal (see Harbas v. Gilmore, 214 A.D.2d 440 [1995], lv dismissed 87 N.Y.2d 861 [1995]), but it assumed defense of the direct defendant 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 third-party defendant's representation of the direct defendant 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 third-party defendant 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" ( Matter of Fry v. Village of Tarrytown, 89 N.Y.2d 714, 718 [1997]; see also Matter of Rougeron, 17 N.Y.2d 264');">17 N.Y.2d 264, 271 [1966], cert denied 385 U.S. 899 [1966]). Here, third-party defendant is not arguing that Supreme Court "never had power to hear a particular type of proceeding in the first place" (see Security Pac. Natl. Bank v Evans, 31 A.D.3d 278');">31 A.D.3d 278, 280 [2006], appeal dismissed 8 N.Y.3d 837 [2007]). 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" (see Rougeron, 17 N.Y.2d at 271). Nor is third-party defendant persuasive in arguing — for the first time on appeal — that Supreme Court lacked personal jurisdiction over it because plaintiff never named it as a direct defendant. Supreme Court has always had the power to render an adjudication over third-party defendant (see Security Pac. Natl. Bank, 31 A.D.3d at 280), which surely would not have assumed the defense of the direct defendant at trial if it believed the court lacked personal jurisdiction over it. Moreover, by first actively participating in the litigation as if it were a direct defendant, and then by failing to raise the issue on appeal, third-party defendant waived its right to rely on Klinger v. Dudley (41 N.Y.2d 362 [1977]), in which the Court of Appeals held that a plaintiff may not recover directly from a third-party defendant over which it has no direct claim (see Harbas v. Gilmore, supra, 214 A.D.2d 440 [1995], lv dismissed 87 N.Y.2d 861 [1995]).

Because we are not granting relief to third-party defendant on the main appeal, we need not address any of the arguments with respect to plaintiff's conditional cross appeal.

The Decision and Order of this Court entered herein on March 3, 2009 is hereby recalled and vacated (see M-1611 decided simultaneously herewith).
All concur except McGuire, J. who concurs in a separate memorandum as follows:

McGUIRE, J. (concurring)

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.

Plaintiff was injured while working on a construction project on property owned by defendant H & L Holding Corp. (306 A.D.2d 58 [2003]). Plaintiff commenced a personal injury action against H & L, which subsequently impleaded Lane, plaintiff's employer. H & L was granted summary judgment on its claim for ...

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