Barclay Damon
Barclay Damon

Legal Alert

Exclusivity of Workers' Compensation Law Trumps Vicarious Liability of Vehicle Owner

New York’s Court of Appeals recently held that a defendant may not pursue a third-party contribution claim under Vehicle and Traffic Law § 388 against a vehicle owner where the driver’s negligence caused the plaintiff’s injuries, but the driver is insulated from liability under Workers’ Compensation Law § 29(6). See Isabella v. Koubek, __ N.Y.3d __, 2014 NY Slip Op 2100 (March 27, 2014).

Plaintiff Matthew Isabella, a passenger, was injured in a two-car automobile accident in a vehicle driven by Roberta Oldenborg, a co-worker, when returning from a business meeting. The other vehicle, owned by Peter Hallock, was driven by Doris Hallock. Isabella brought a claim against only the Hallocks. Oldenborg was insulated from liability under Workers’ Compensation Law § 29(6), which provides that the right to workers’ compensation benefits is the exclusive remedy to an employee injured by the wrongdoing of another employee. Oldenborg was similarly insulated from a third-party claim by the Hallocks pursuant to Workers’ Compensation Law § 11, which precludes a third-party from seeking contribution or indemnification from the employer or from a co-employee unless the injured party has sustained a “grave injury” (not an issue in this case).

The Hallocks filed a third-party complaint against Michael Koubek, Oldenborg’s husband and owner of the vehicle driven by Oldenborg. The Hallocks contended that Koubek was vicariously liable for Oldenborg’s negligence pursuant to Vehicle and Traffic Law § 388, which provides that every motor vehicle owner is vicariously liable for the negligent use of his vehicle. Koubek moved for summary judgment, asserting that Oldenborg’s immunity under the Workers’ Compensation Law likewise shielded him from liability under Vehicle and Traffic Law § 388. The District Court denied Koubek’s motion. The parties subsequently settled the case for $800,000 subject to a jury’s apportionment of liability. The jury found the Hallocks were 10% liable and Koubek 90% liable based solely on his wife’s negligence.

Koubek appealed and the Second Circuit certified this question to the Court of Appeals: whether a defendant may pursue a third-party contribution claim under New York Vehicle and Traffic Law § 388 against the owner of a vehicle, where the vehicle driver’s negligence was a substantial factor in causing the plaintiff’s injuries, but the driver is protected from suit by the exclusive remedy provisions of New York Workers’ Compensation Law § 29(6)?

The Court of Appeals found that the Hallocks third-party claim against Koubek was not permissible. The Court held that Koubek should not be held liable for third-party contribution where his various liability would stem solely from the negligence of the immunized driver. The Court rejected the Hallocks’ argument that it would be unfair to saddle them with the entire $800,000 settlement, even though the jury found the Hallocks were only 10% liable. The result was simply a consequence of joint and several liability, which has been a long-standing feature of New York law, whereas Vehicle and Traffic Law § 388 was primarily designed to ensure that injured persons be able to recover against the vehicle owner.

The Court’s decision in Isabella confirms that parties will be broadly protected by the exclusivity provisions of the Workers’ Compensation Law, including in personal injury actions involving motor vehicle accidents, except in the limited instances where a “grave injury” is sustained.

If you require further information regarding the content of this Legal Alert, please contact Thomas B. Cronmiller, Chair of the Torts & Products Liability Defense Practice Area at (585) 295-4424 or tcronmiller@hblaw.com.