NCA COMP, INC., AS ADMINISTRATOR OF CONTRACTORS SELF-INSURANCE TRUST FUND, PLAINTIFF-APPELLANT,
1289 CLIFFORD AVE., DOING BUSINESS AS EMPIRE HEATING & AIR CONDITIONING, ET AL., DEFENDANTS, BABCOCK UTILITIES, INC., MARK CERRONE, INC., AND JO TO MOE, CORP., DEFENDANTS-RESPONDENTS. (APPEAL NO. 1.)
TREVETT CRISTO SALZER ANDOLINA, P.C., ROCHESTER (ALAN J.
DEPETERS OF COUNSEL), FOR PLAINTIFF-APPELLANT.
PHILLIPS LYTLE LLP, BUFFALO (CRAIG R. BUCKI OF COUNSEL), FOR
PRESENT: CENTRA, J.P., PERADOTTO, CARNI, AND LINDLEY, JJ.
from an order of the Supreme Court, Erie County (Timothy J.
Walker, A.J.), entered August 6, 2015. The order granted the
motion of defendants Babcock Utilities, Inc., Mark Cerrone,
Inc., and Jo to Moe, Corp. to dismiss plaintiff's
complaint against them.
hereby ORDERED that the order so appealed from is unanimously
reversed on the law without costs, the motion is denied and
the complaint against defendants Babcock Utilities, Inc.,
Mark Cerrone, Inc. and Jo to Moe, Corp. is reinstated.
Plaintiff, the administrator of a group self-insurance trust
(GSIT) created pursuant to Workers' Compensation Law
§ 50 (3-a), commenced this action seeking to collect
assessments made against, inter alia, defendants-respondents
in appeal Nos. 1 and 2 (hereafter, defendants) calculated
upon the fiscal years in which defendants participated in the
GSIT. In appeal No. 1, plaintiff appeals from an order that
granted the pre-answer motion of defendants Babcock
Utilities, Inc., Mark Cerrone, Inc. and Jo to Moe, Corp.
pursuant to CPLR 3211 (a) (1), (5) and (7) to dismiss the
complaint against them. In appeal No. 2, plaintiff appeals
from an order that granted the pre-answer motion of defendant
Memminger's Painting, Inc. and the cross motion of
defendant Historicon, Inc., both pursuant to CPLR 3211 (a)
(1), (5) and (7), seeking dismissal of the complaint against
them. Based upon its interpretation of the language of the
GSIT agreement, Supreme Court concluded that the assessments
at issue were "invalid." We reverse both orders.
CPLR 3211 (a) (1), a dismissal is warranted only if the
documentary evidence submitted conclusively establishes a
defense to the asserted claims as a matter of law"
(Leon v Martinez, 84 N.Y.2d 83, 88). For the reasons
that follow, we agree with plaintiff that the documentary
evidence submitted by defendants does not conclusively
establish, as a matter of law, that defendants have no
contractual liability to pay the assessments at issue. We
begin by observing that, contrary to the contention of
defendants, our determination in Metal Goods & Mfrs.
Ins. Trust Fund v Advent Tool & Mold, Inc. (61
A.D.3d 1412) is not dispositive of the issues in these
appeals for the simple reasons that Metal Goods
arose not in the CPLR 3211 context, but rather in the CPLR
3212 summary judgment context, and the language of the GSIT
agreement in Metal Goods with respect to how
under-funding would be addressed differs substantially and
substantively from the GSIT agreement herein. Among other
differences, the GSIT in Metal Goods only provided
for a prospective "rate increase, " while the GSIT
here provides for an assessment based upon the fiscal years
in which a defendant participated, regardless of whether a
defendant is actually participating at the time the
assessment is made.
terms of additional factual background with respect to the
instant matter, the record establishes that in 1998
defendants and other contractors that were involved in the
construction industry and subject to the Workers'
Compensation Law with respect to their employees established
the GSIT in order to comply with the law and provide
workers' compensation benefits to their employees.
Thereafter, all defendants made contributions and
participated in the GSIT for varying periods of time, and
there is no dispute that, by the end of the 2009 fiscal year,
all defendants had ceased making contributions to the GSIT.
2011, the GSIT ceased all new or prospective workers'
compensation coverage operations because it was underfunded
and lacked a sufficient income stream to continue operations.
Recognizing the precarious financial condition of the GSIT,
in March 2014 the trustees ultimately resolved to purchase an
"Assumption of Workers' Compensation Policy"
(ALP), which would relieve the GSIT and all contractors of
any liability for existing claims and continuing benefit
obligations. Those liabilities would be shifted to the
insurance carrier issuing the ALP upon payment of the agreed
premium. The problem for the GSIT, however, was that it did
not have sufficient funds on hand to pay the full ALP
premium. Thus, in July 2014, the GSIT issued
"assessments" to defendants and other contractors
in order to raise the additional funds necessary to pay the
one-time ALP premium. Defendants refused to pay the
assessments, and this litigation ensued.
IV, section 4.10 of the 1998 version of the GSIT, entitled
"Power To Assess Employers, " states in pertinent
part that, "[i]n the event that unreserved assets of the
Trust are insufficient to meet the obligations of the Trust,
the Trustees shall forthwith prepare and implement a plan to
require an additional payment by the Employers in the form of
an assessment which shall be sufficient to make up any
deficiency as determined by the Trustees at that time."
In addition, it provides that "[e]ach Employer who
participates in the Trust hereby agrees to pay such
assessments to the Trust on Demand regardless of whether or
not they are a participant in the Trust at the time the
assessment is made."
the assessment at issue for each defendant was calculated, in
accordance with section 4.11 of the GSIT, only upon the
fiscal years in which each contractor actually made
contributions to the GSIT.
is no dispute that the GSIT made payment of short-term
benefits to defendants' employees and, at least
theoretically on this record, incurred long-term workers'
compensation liabilities in the form of continuing medical
benefits and wage benefits to employees with permanent
disabilities and/or ongoing medical costs lasting well beyond
the fiscal years in which defendants made contributions.
Those potential long-term liabilities for benefits to
defendants' injured employees appear to be the reason for
the inclusion of the assessment clause in the GSIT. Without
that clause, a contractor could have multiple employees
permanently injured and disabled during the period in which
it made contributions, and then walk away from any future
obligation to assist in the funding of those liabilities if
the GSIT became underfunded, simply by ceasing to make
2009, the trustees amended Article I, Definitions, of the
GSIT to include section 1.1 (A), which defines the terms
active member and inactive member as follows: "Active
Member shall mean an employer currently participating in the
Trust Fund. Inactive Member shall mean an employer no longer
participating in the Trust Fund." In addition, section
4.10, now entitled "Power to Assess Active and Inactive
Members, " was amended to read as follows: "In the
event that assets of the Trust are insufficient to meet the
obligations of the Trust, the Trustees shall forthwith
prepare and implement a plan to require an additional payment
by the Active and Inactive Members in the form of an
assessment which shall be sufficient to make up any
deficiency as determined by the Trustees at that time. The
formula and method of assessment shall be that described in
Section 4.11 below. Each Employer who participates in the
Trust hereby agrees to pay such assessment to the Trust on
Demand regardless of whether or not they are an Active or
Inactive Member of the Trust at the time the assessment is
the language of section 4.11 was also amended in 2009, it did
not alter the ...