Assessing whether common law compensation (or contribution) applies in a particular case is complicated and requires consideration of the relevant facts on a case-by-case basis. If you have a situation or have any questions about the possibility of compensation or common law contribution in your case, please contact the labour law team at Hurwitz & Fine, P.C. We have extensive experience in these areas and are happy to help you. Although the three forms of compensation have already been considered different, California courts have ruled that there are only two basic types of compensation: explicit compensation and fair compensation. Although it has not expired, implied contractual compensation is now simply considered “a form of fair compensation”. Prince vs Pacific Gas & Electric Co. (2009) 45 Cal. 4 1151, 1157. In this issue of their Commercial Division update, Thomas J. Hall and Judith A.
Archer discussed recent cases that provided additional insight into the application of common law claim requirements. Our legal system aims to compensate an aggrieved party for losses suffered while disciplining the wrong party for causing such damages through their inappropriate actions or omissions. However, due to the vicarious agent`s liability, an innocent party may be held liable for injuries caused by another party due to the legal relationship between the innocent party and the injured third party, for example, a builder`s liability to third parties for the actions of its tenants. Often, claims arise from explicit compensation agreements, but the right to claim compensation may also be implied by law, despite the absence of an agreement. Although these doctrines allow one party to transfer a loss to another, they are generally strictly enforced. Recent decisions of the Commercial Division have provided additional insight into the application of the common law claim requirements. The Court first summarized the Compensation Act at common law. In general, a party can only obtain this remedy if it has been held vicariously liable without negligence on its part or by operation of law. As a result, a party who has breached a contract itself cannot successfully assert a claim for compensation under the common law. In this case, mac II`s eventual liability was based on its own breach of contract with the Matzingers. Accordingly, the Court dismissed the common law claim for compensation. While some confusion was clearly visible in the Post-Dole Dictation, the current state of common law compensation in New York (as promulgated by the Court of Appeals, since the position between offenses was first approved in Dole) is now clear in federal jurisprudence.
Compensation is no longer available under New York law if the proposed indemnifier is responsible for the damage for which he or she is seeking compensation. See Amusement Indus., Inc.c. Stern, 693 F. Supp. 2d 319, 326-27 (S.D.N.Y. 2010). LJN`s Product Liability Law & Strategy October 2012. Only MAC II`s claim for compensation survived Fanuka and TecDsign`s request for rejection. Although there is no indemnification clause in MAC II`s contract with any of them, the court concluded in this case that MAC II could rightly claim tacit contractual compensation. The Courts of New York have recognized that there is a special relationship between general contractors and subcontractors, and therefore a general contractor may recover from a subcontractor any damage suffered by the contractor as a result of the breach of the subcontractor`s contract.
The court cited two New York cases for this proposal – People`s Democratic Republic of Yemen v. Goodpasture, 782 F.2d 346, 351 (2d Cir. 1986) and Menorah Nursing Home, Inc.c. Zukov, 153 A.D. 2d 13, 24, 584 N.Y.S.2d 702 (2d Dept. 1989). Although Fanuka was mandated as a general contractor and not as a typical subcontractor, the implied contractual reason for MAC II`s indemnification was permitted here due to the division of responsibilities between MAC II and Fanuka. The court also found that the principal was referring to TecDsgin because it was in fact a subcontractor. Thus, the implied contractual right to exemption from MAC II could continue. They represent the manufacturer of machine parts.
Your client recently learned that he had been named as a defendant in a lawsuit filed by a class of consumers for injuries he allegedly suffered while using a machine made with your customer`s parts. The manufacturer of separate but interconnected parts used in the machine was also named as a defendant. A month later, your customer received follow-up claims from the manufacturer of the interconnected parts, which required both compensation under customary law and a contribution against your customer for the production of allegedly defective parts. Your customer will endeavor to make an initial assessment of third-party claims. New York law applies. To circumvent the contribution, Greyhound also claimed that it was entitled to “common law compensation” from Goodyear. Recognizing that there was no particular relationship between him and Goodyear, which led to the “traditional” common law compensation scenarios, Greyhound instead argued that common law compensation is not limited to the liability of vicarious agents or non-delegable duty scenarios, but is extended under New York law by notions of “fairness” to prevent an “unfair or unsatisfactory outcome.” Essentially, Greyhound advocated for the application of the “asset-liability” test abandoned at Dole. The case involving the Department of Sanitation employee was essentially a lawsuit against his employer for injuries caused by a defective product. (The plaintiff had a viable cause of action against the city, his employer, because the Workers` Compensation Act did not apply to the Department of Sanitation at the time.) As a result, customary and legal obligations applied to the city (as an employer). The City, as a common law employer, agreed with the employee because of its non-delegable legal and customary obligations.
The city, in turn, claimed compensation from the manufacturer. As is often the case when the company claiming compensation is also subject to some negligence (or has exercised effective supervision or control), common law compensation is not available. When this happens, all hope for recovery is not lost. If the responsible company has acted only partially negligently, it may be entitled to assert a request for a common law contribution from the other co-successors. The common law contribution, unlike the common law indemnification, is based on the degree of fault of each joint tort lawyer. The premise of common law indemnification is vicarious liability, defined as “the responsibility assumed by a supervisory party (e.g., B an employer) for conduct punishable by a subordinate or employee (e.g., B an employee) based on the relationship between the two parties” Black`s Law Dictionary (11. 2019 Edition). Common law indemnification “reflects an inherent fairness as to which party should be held liable for the indemnification.” McCarthy, 17 N.Y.3d at 375. It is a concept of restitution that allows the loss to be shifted, otherwise it would lead to an unjustified enrichment of one party at the expense of the others. Mas, 75 N.Y.2d at 680, 690; Kingsbrook Jewish Medical Center against Islam, 172 A.D.3d 1342, 1343 (2d Dept.
2019). Jurisdictions vary To return to our hypothetical opening, based on the analysis above, you can recommend an early request for a summary verdict to dismiss the common law compensation claim in New York. In addition, if their co-respondent settles the matter later, your client can use the GOL and reject the contribution request. Unfortunately, there are certain circumstances in which the company held liable cannot claim common law compensation from the corporation that is truly negligent. Such situations can occur regularly in construction cases. Therefore, in order to successfully obtain common law compensation, the requesting entity must prove that it did not act negligently and that the entity from which compensation is sought acted negligently or had the power to direct, supervise and control the work causing the damage […].
