author: Graffeo, J. Pigott, J. (dissenting).

text:
    [879 NE2d 1291, 849 NYS2d 473]
    Hospital for Joint Diseases, as Assignee of Jodi Friedman and Another, Plaintiff, and New York and Presbyterian Hospital, as Assignee of William Browne, Respondent, v Travelers Property Casualty Insurance Company et al., Appellants.
    Argued October 11, 2007;
    decided November 20, 2007

      POINTS OF COUNSEL

      McDonnell & Adels, P.C., Garden City (Martha S. Henley and Zara G. Friedman of counsel), for appellants.
    I. Plaintiff has failed to demonstrate that it has standing to sue. (Lacks v Lacks, 41 NY2d 71; City of New York v State of New York, 86 NY2d 286; Matter of New York State Inspection, Sec. & Law Enforcement Empls., Dist. Council 82, AFSCME, AFL-CIO v Cuomo, 64 NY2d 233; Robinson v Oceanic Steam Nav. Co., 112 NY 315; Matter of Rougeron, 17 NY2d 264; Editorial Photocolor Archives v Granger Collection, 61 NY2d 517; Matter of Dairylea Coop. v Walkley, 38 NY2d 6; Society of Plastics Indus. v County of Suffolk, 77 NY2d 761; Cuomo v Long Is. Light. Co., 71 NY2d 349; Community Bd. 7 of Borough of Manhattan v Schaffer, 84 NY2d 148.) II. The Appellate Division’s holding impermissibly awards benefits to plaintiff, finding coverage by waiver. (Albert J. Schiff Assoc. v Flack, 51 NY2d 692; Powers Chemco v Federal Ins. Co., 122 AD2d 203; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195.) III. Preclusion does not advance the goals of no-fault legislation. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564, 5 NY3d 713; New York Hosp. Med. Ctr. of Queens v AIU Ins. Co., 8 AD3d 456; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11; New York & Presbyt. Hosp. v New York Cent. Mut. Fire Ins. Co., 31 AD3d 403; ABC Med. Mgt. v GEICO Gen. Ins. Co., 3 Misc 3d 181; Vladimir Zlatnick, M.D.,

      P.C. v Government Empls. Ins. Co., 2 Misc 3d 347; Universal Acupuncture Pain Servs. v Lumbermens Mut. Cas. Co., 195 Misc 2d 352.) IV Applying preclusion due to defendant’s failure to request verification of an assignment is inconsistent with the strict construction afforded the No-Fault Law. (Maxwell v State Farm Mut. Auto. Ins. Co., 92 AD2d 1049; Morris v Snappy Car Rental, 84 NY2d 21; Allstate Ins. Co. v Gross, 27 NY2d 263; Pommells v Perez, 4 NY3d 566; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854; Matter of Notre Dame Leasing v Rosario, 2 NY3d 459; Blue Cross & Blue Shield of N.J., Inc. v Philip Morris USA Inc., 3 NY3d 200; Rockaway Blvd. Med. P.C. v Progressive Ins., 9 Misc 3d 52; A.B. Med. Servs. PLLC v Liberty Mut. Ins. Co., 9 Misc 3d 36.)

      Joseph Henig, P.C., Bellmore (Gregory Henig and Joseph Henig of counsel), for respondents.
    I. Defendant’s failure to object to the lack of a signature on the assignment portion of the hospital facility form constituted a waiver. (Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564; New York Hosp. Med. Ctr. of Queens v AIU Ins. Co., 8 AD3d 456; New York & Presbyt. Hosp. v American Tr. Ins. Co., 287 AD2d 699; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11; Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co., 233 AD2d 433; Fabian v Motor Veh. Acc. Indem. Corp., 111 AD2d 366; Matter of Fireman’s Fund Ins. Co. v Freda, 156 AD2d 364; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274; St. Clare’s Hosp. v Allcity Ins. Co., 201 AD2d 718.) II. Defendant’s failure to request further verification of the assignment or to request the original assignment barred defendant from contending that plaintiff had “no standing to sue.” (Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348.) III. Plaintiffs NYS Form NF-5 remained unpaid and gave plaintiff “standing to sue” pursuant to article 51 of the Insurance Law and the insurance regulations. IV Plaintiffs motion was deemed admitted as there was no affidavit of merit in opposition to the motion and defendant had no standing to challenge the assignment on appeal. (Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742; Reddy v Coca-Cola Bottling Co. of N.Y., 278 AD2d 295; Zuckerman v City of New York, 49 NY2d 557; Chiarini v County of Ulster, 9 AD3d 769; Moonstone Judge, LLC v Shainwald, 38 AD3d 215; Penny v Pembrook Mgt., 280 AD2d 590.) V Defendant failed to issue a denial of claim form and was precluded from interposing a defense to the action. (Presbyterian Hosp. in

      City of N.Y. v Maryland Cas. Co., 90 NY2d 274; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11.) VI. Defendant raises argument for the first time on appeal that is dehors the record on appeal and should not be considered by the honorable Court. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274; Dinneny v Allstate Ins. Co., 295 AD2d 797; Matter of Seelig v Koehler, 76 NY2d 87.)

      Short & Billy, P.C., New York City (Skip Short and Amanda Jehle of counsel), for Property Casualty Insurers Association of America and others, amici curiae.
    I. A valid assignment is a condition of coverage of a health provider’s claim. (Zappone v Home Ins. Co., 55 NY2d 131; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195.) II. The rule of preclusion should be abandoned in no-fault claims. (Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195; Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854; Zappone v Home Ins. Co., 55 NY2d 131; Matter of Liberty Mut. Ins. Co. [Hogan], 82 NY2d 57; Allstate Ins. Co. v Gross, 27 NY2d 263; Pommells v Perez, 4 NY3d 566; Walton v Lumbermens Mut. Cas. Co., 88 NY2d 211.) III. The applicant has the burden of proof of medical necessity in a claim brought under Insurance Law article 51. (Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274; Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195; Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854; Pommells v Perez, 4 NY3d 566; Mount Sinai Hosp. v Triboro Coach, 263 AD2d 11; Amaze Med. Supply v Eagle Ins. Co., 2 Misc 3d 128[A], 2003 NY Slip Op 51701[U]; Mary Immaculate Hosp. v Allstate Ins. Co., 5 AD3d 742; A.B. Med. Servs. PLLC v Lumbermens Mut. Cas. Co., 4 Misc 3d 86; Clemens v Apple, 65 NY2d 746; Oquendo v New York City Tr. Auth., 246 AD2d 635.)

      Rivkin Radler LLP, Uniondale (Evan H. Krinick, Barry I. Levy, Cheryl F. Korman and Stuart M. Bodoff of counsel), for
    New York Insurance Association, Inc., amicus curiae.
    The fundamental defense of lack of standing survives preclusion even if an insurer did not pay or deny a claim for reimbursement of no-fault benefits on that ground within 30 days of the receipt of that claim. (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761; City of New York v State of New York, 86 NY2d 286; Presbyterian Hosp. in City of N.Y. v Maryland Cas.

      Co., 90 NY2d 274; Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185; Zappone v Home Ins. Co., 55 NY2d 131; Markevics v Liberty Mut. Ins. Co., 97 NY2d 646; Handelsman v Sea Ins. Co., 85 NY2d 96; Matter of Allstate Ins. Co. v Massre, 14 AD3d 610; State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490; State Farm Mut. Auto. Ins. Co. v Mallela, 4 NY3d 313.)
   OPINION OF THE COURT

Graffeo, J.

In this action, a hospital seeks to recover no-fault insurance benefits for services rendered to a patient injured in a motor vehicle accident. We conclude that the insurance company’s failure to timely request verification of the patient’s assignment of benefits to the hospital precludes the carrier from now contesting the validity of the assignment. We therefore affirm the order of the Appellate Division so holding.

Plaintiff New York and Presbyterian Hospital treated patient Browne in 2004 for injuries he sustained as a result of an automobile accident. At the time of the accident, Browne had an automobile insurance policy with defendant Travelers Property Casualty Insurance Company affording him first-party no-fault coverage. In October 2004, the hospital, through its contract billing agent—Hospital Receivables Systems, Inc.—sought payment of $24,344.96 from Travelers for services provided to Browne. The billing agent sent Travelers a hospital facility form (NYS Form NF-5), a UB-92 form and an assignment of benefits form (NYS Form NF-AOB). The assignment portion of the NYS Form NF-5 and the assignment of benefits form both indicated that Browne’s signature was “on file,” but neither form displayed his actual signature.

Travelers did not reject the forms or request verification of the assignment. After Travelers failed to pay or deny the claim within 30 days of its receipt, the hospital commenced this action against Travelers and Farmington Casualty Company (an affiliated carrier) for payment of its bill as well as statutory interest and attorneys’ fees under Insurance Law § 5106 (a). In its answer, Travelers raised as an affirmative defense the lack of a valid assignment between Browne and the hospital.

Both parties moved for summary judgment and Supreme Court granted the hospital’s motion and directed entry of judgment against Travelers in the amount of $24,344.96 plus statutory interest and attorneys’ fees. The court held that Travelers’ failure to timely contest any deficiency in the assignment documents precluded the carrier from raising the issue in this proceeding. The Appellate Division affirmed and we granted Travelers leave to appeal.

New York’s no-fault automobile insurance system is designed “to ensure prompt compensation for losses incurred by accident victims without regard to fault or negligence, to reduce the burden on the courts and to provide substantial premium savings to New York motorists” (Matter of Medical Socy. of State of N.Y. v Serio, 100 NY2d 854, 860 [2003]). In furtherance of these goals, the Superintendent of Insurance has adopted regulations implementing the No-Fault Law (Insurance Law art 51), including circumscribed time frames for claim procedures.

These regulations require an accident victim to submit a notice of claim to the insurer as soon as practicable and no later than 30 days after an accident (see 11 NYCRR 65-1.1, 65-2.4 [b]). Next, the injured party or the assignee (typically a hospital, as in the case here) must submit proof of claim for medical treatment no later than 45 days after services are rendered (see 11 NYCRR 65-1.1, 65-2.4 [c]). 3Upon receipt of one or more of the prescribed verification forms used to establish proof of claim, such as the NYS Form NF-5, an insurer has 15 business days within which to request “any additional verification required by the insurer to establish proof of claim” (11 NYCRR 65-3.5 [b]). An insurer may also request “the original assignment or authorization to pay benefits form to establish proof of claim” within this time frame (11 NYCRR 65-3.11 [c]). Significantly, an insurance company must pay or deny the claim within 30 calendar days after receipt of the proof of claim (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.8 [c]). If an insurer seeks additional verification, however, the 30-day window is tolled until it receives the relevant information requested (see 11 NYCRR 65-3.8 [a] [1]).

An insurer’s failure to pay or deny a claim within 30 days carries substantial consequences. By statute, overdue payments earn monthly interest at a rate of two percent and entitle a claimant to reasonable attorneys’ fees incurred in securing payment of a valid claim (see Insurance Law § 5106 [a]). More importantly, a carrier that fails to deny a claim within the 30-day period is generally precluded from asserting a defense against payment of the claim (see Presbyterian Hosp. in City of N.Y. v Maryland Cas. Co., 90 NY2d 274, 282 [1997], rearg denied 90 NY2d 937 [1997]). This Court has recognized a narrow exception to this preclusion remedy for situations where an insurance company raises a defense of lack of coverage (see Central Gen. Hosp. v Chubb Group of Ins. Cos., 90 NY2d 195, 199 [1997]). In such cases, an insurer who fails to issue a timely disclaimer is not prohibited from later raising the defense because “the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed” (Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188 [2000]).

As a corollary to the Presbyterian preclusion rule, Appellate Division case law consistently holds that a carrier’s failure to seek verification or object to the adequacy of claim forms pursuant to 11 NYCRR 65-3.5 precludes it from interposing any defenses based on such deficiencies (see e.g. Westchester Med. Ctr. v Safeco Ins. Co. of Am., 40 AD3d 984 [2d Dept 2007]; LMK Psychological Servs., P.C. v Liberty Mut. Ins. Co., 30 AD3d 727, 728-729 [3d Dept 2006]). We concur and note that an insurer that requests additional verification after the 10- or 15-business-day periods but before the 30-day claim denial window has expired is entitled to verification. In these instances, the 30-day time frame to pay or deny the claim is correspondingly reduced (see 11 NYCRR 65-3.8 [j]; Nyack Hosp. v General Motors Acceptance Corp., 8 NY3d 294, 300 [2007]).

Here, after Travelers obtained the NYS Form NF-5 and the assignment of benefits form—both of which plainly stated that the patient’s signature was “on file”—it did not ask for further verification or request the original assignment, as permitted by the regulations. Travelers also failed to pay or deny the claim within 30 calendar days of receipt of the hospital’s proof of claim. Nevertheless, Travelers argues that its neglect in demanding verification or timely denying coverage is irrelevant because the hospital’s failure to proffer a validly executed assignment equates to a lack of coverage, a defense that is not subject to preclusion under Chubb. We disagree.

In Chubb, the insurer asserted as a defense that the claimant’s injuries arose out of a prior work-related accident rather than a car accident. Alternatively, the carrier refused payment on the ground that the patient’s treatment was excessive. We held that the insurer was not barred from arguing that the injuries were unrelated to the accident because, if true, the treatment would not have been covered by the automobile liability policy in the first instance. On the other hand, we indicated that an excessive treatment defense ordinarily does not implicate a coverage issue, in which situation the preclusion rule applies (90 NY2d at 199).

Here, there is no dispute that the hospital rendered medical services to Browne in the amount of $24,344.96 for injuries arising out of a motor vehicle accident, that Browne’s policy with Travelers was in effect at the time of the accident and that the policy covered the accident. In our view, any defect or deficiency in the assignment between Browne and the hospital simply does not implicate a lack of coverage warranting exemption from the preclusion rule. We therefore determine that the failure by Travelers to seek verification of the assignment in a timely manner prevents the carrier from litigating the issue now.

To conclude otherwise, as proposed by the dissent, frustrates a core objective of the no-fault regime—“to provide a tightly timed process of claim, disputation and payment” (Presbyterian, 90 NY2d at 281). Upon receipt of a no-fault claim, the regulations shift the burden to the carrier to obtain further verification or deny or pay the claim. When, as here, an insurer does neither, but instead waits to be sued for nonpayment, the carrier should bear the consequences of its nonaction. To allow an insurance company to later challenge a hospital’s standing as an assignee merely encourages the carrier to ignore the prescribed statutory scheme. As we observed in Presbyterian:

“No-fault reform was enacted to provide prompt uncontested, first-party insurance benefits. That is part of the price paid to eliminate the common-law contested lawsuits . . . The tradeoff of the no-fault reform still allows carriers to contest ill-founded, illegitimate and fraudulent claims, but within a strict, short-leashed contestable period and process designed to avoid prejudice and red-tape dilatory practices” (id. at 285 [citation omitted]).

Finally, Travelers contends that an assignment of benefits is a necessary component of the hospital’s prima facie case for recovery of no-fault benefits. Even assuming that this is true, we conclude that an assignment form stating that the patient’s signature is “on file” satisfies that burden where the carrier does not timely take action to verify the existence of a valid assignment (see Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 [2d Dept 2005]). Since Travelers does not otherwise contest the hospital’s entitlement to no-fault payments, the courts below appropriately awarded summary judgment to the hospital. We have considered Travelers’ remaining contentions and find them without merit.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Pigott, J. (dissenting).

I respectfully dissent. In my view, Travelers should not be precluded from asserting the affirmative defense that plaintiff Hospital lacked standing to sue—i.e., that it did not obtain a valid assignment from the recipient of medical services—even though Travelers did not obtain additional verification or deny the claim within the prescribed time periods set forth in the no-fault insurance regulations.

As explained by the majority, Travelers failed to request additional verification after receiving the Hospital’s claim and assignment of benefits forms, nor did it deny or pay the claim within the required 30-day time period. Nevertheless, after the Hospital commenced this action against Travelers for payment, Travelers asserted an affirmative defense that the Hospital lacked standing to bring the suit on the grounds that it did not obtain a valid assignment of benefits from the patient.

Of course, a plaintiff must have standing in order to bring an action in the courts of this State. “Whether a person seeking relief is a proper party to request an adjudication is an aspect of justiciability which, when challenged, must be considered at the outset of any litigation” (Society of Plastics Indus. v County of Suffolk, 77 NY2d 761, 769 [1991], citing Matter of Dairylea Coop. v Walkley, 38 NY2d 6, 9 [1975]). “Standing is a threshold determination, resting in part on policy considerations, that a person should be allowed access to the courts to adjudicate the merits of a particular dispute that satisfies the other justiciability criteria” (Society of Plastics Indus., 77 NY2d at 769). This Court has also recognized that “questions of . . . standing of parties may be characterized as raising questions of subject matter jurisdiction” (Lacks v Lacks, 41 NY2d 71, 74 [1976]; see also City of New York v State of New York, 86 NY2d 286, 292 [1995] [“The issue of lack of capacity to sue does not go to the jurisdiction of the court, as is the case when the plaintiffs lack standing”]).

Only where there is a properly executed assignment does an assignee become the “real party in interest” and acquire standing to enforce the rights of an assignor (James McKinney & Son v Lake Placid 1980 Olympic Games, 61 NY2d 836, 838 [1984]). “[T]o effect an assignment . . . there [must] be a perfected transaction between the assignor and assignee, intended by those parties to vest in the assignee a present right in the things [or rights] assigned” (Leon v Martinez, 84 NY2d 83, 88 [1994], citing 4 Corbin, Contracts § 879, at 528 [1951]). Without an assignment from the patient, a medical services provider clearly lacks standing to sue a no-fault insurance carrier to directly collect payment for services it rendered to the patient (see 11 NYCRR 65-3.11 [b] [1], [2] [“(i)n order for a health care provider (or) hospital to receive direct payment from the insurer, the health care provider or hospital must submit to the insurer . . . a properly executed Authorization to Pay Benefits” or “a properly executed assignment” from the injured party]).

As discussed by the majority, in Central Gen. Hosp. v Chubb Group of Ins. Cos. (90 NY2d 195 [1997]), we held that a no-fault insurer was not precluded from raising a defense of lack of coverage despite an untimely disclaimer. In so holding, the Court stated that “[t]he denial of liability based upon lack of coverage within the insurance agreement ... is distinguishable from disclaimer attempts based on a breach of a policy condition” (id. at 199). The majority here further explains that a carrier is not precluded from asserting a noncoverage defense because “the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed” (majority op at 318, quoting Matter of Worcester Ins. Co. v Bettenhauser, 95 NY2d 185, 188 [2000]). In my view, a carrier’s defense based on the lack of a valid assignment equates to a defense implicating “lack of coverage within the insurance agreement” (Chubb, 90 NY2d at 199), and thus, should similarly not be precluded. Although there is no dispute that the assignor-patient was covered by the insurance policy with Travelers and received medical treatment at the Hospital, similar to our concerns in Chubb, the policy here does not contemplate payment to the Hospital in the first instance. Indeed, the Hospital has no legal right to collect payment if and until a valid assignment is obtained from the patient. Thus, in my view, Travelers’ defense challenging the validity of the assignment is akin to a defense premised upon lack of coverage.

Further, contrary to the majority’s position, in my view, standing cannot be artificially created by a carrier’s failure to object within the time periods set forth in the no-fault insurance regulations. Put another way, a medical services provider cannot establish standing by merely relying upon a carrier’s prelitigation inaction. By allowing a plaintiff to do so, the majority, in essence, creates a rule whereby a plaintiff can establish its standing by estoppel, as a result not only of a defendant’s inaction, but by its simple neglect, oversight or clerical error.

I must take issue with the majority’s view that this position would encourage noncompliance with the no-fault statutory and regulatory scheme. If an insurer fails to timely pay a valid claim, it is subject to the payment of interest at 2% per month plus attorneys’ fees (see Insurance Law § 5106 [a]; 11 NYCRR 65-3.9, 65-3.10), which is why these matters are better resolved in an arbitration setting rather than through the courts as has occurred here. Our decision today, in my view, encourages the use of the courts by eliminating an essential element of most lawsuits—standing—and runs the risk of encouraging this type of litigation at the carrier’s peril.

Thus, here, the Hospital should be required to affirmatively prove standing, upon Travelers’ objection, as part of its prima facie case (see TPZ Corp. v Dabbs, 25 AD3d 787, 789 [2d Dept 2006] [holding that the plaintiff was not entitled to summary judgment in an action to collect on a promissory note because “it failed to present competent proof of its standing as an assignee of the note” and defendant challenged “(t)he validity of the assignment of the note to the plaintiff, and the plaintiff’s standing to prosecute (the) action” in its answer]; Rockland Lease Funding Corp. v Waste Mgt. of N.Y., 245 AD2d 779 [3d Dept 1997] [holding that the plaintiff lacked standing to bring the action where there was no record evidence supporting its contention that it obtained an assignment]). The Hospital could have done so simply by producing proper documentary evidence of the assignment vesting it with the right to collect payment. Because the Hospital failed to do so, it did not establish its entitlement to judgment as a matter of law.

Accordingly, I would reverse the Appellate Division order and deny plaintiffs motion for summary judgment.

Chief Judge Kaye and Judges Ciparick, Read, Smith and Jones concur with Judge Graffeo; Judge Pigott dissents and votes to reverse in a separate opinion.

Order affirmed, with costs.

      . Originally, plaintiff Hospital for Joint Diseases, as the assignee of two other patients, jointly sued Travelers and Farmington for nonpayment of no-fault benefits. Those claims were subsequently withdrawn.

      . A hospital may request payment from the insurer by submitting a properly executed authorization to pay benefits or properly executed assignment on one of the prescribed verification forms or an assignment of benefits form (see 11 NYCRR 65-3.11 [b]).

      . Where a claimant submits an application for no-fault benefits (NYS Form NF-2) without verification forms, the insurer has 10 business days to forward the “prescribed verification forms it will require prior to payment of the initial claim” (11 NYCRR 65-3.5 [a]).

      . As another example, courts have held that an insurance company is not prevented from later denying a claim where the injured party deliberately caused the collision as part of a fraudulent scheme, holding that an intentional crash is not an “accident” covered by the policy (see Matter of Allstate Ins. Co. v Massre, 14 AD3d 610 [2d Dept 2005]; State Farm Mut. Auto. Ins. Co. v Laguerre, 305 AD2d 490 [2d Dept 2003]).

      . We note that this conclusion is consistent with Appellate Division precedents that have considered similar circumstances (see Westchester Med. Ctr. v Safeco Ins. Co. of Am., 40 AD3d 984 [2d Dept 2007]; LMK Psychological Servs., P.C. v Liberty Mut. Ins. Co., 30 AD3d 727 [3d Dept 2006]; Nyack Hosp. v Encompass Ins. Co., 23 AD3d 535 [2d Dept 2005], appeal dismissed 8 NY3d 895 [2007]; Hospital for Joint Diseases v Allstate Ins. Co., 21 AD3d 348 [2d Dept 2005]; Nyack Hosp. v Metropolitan Prop. & Cas. Ins. Co., 16 AD3d 564 [2d Dept 2005], lv denied 5 NY3d 713 [2005]; New York Hosp. Med. Ctr. of Queens v New York Cent. Mut. Fire Ins. Co., 8 AD3d 640 [2d Dept 2004], lu denied 3 NY3d 609 [2004]; Presbyterian Hosp. in City of N.Y. v Aetna Cas. & Sur. Co., 233 AD2d 433 [2d Dept 1996], lu dismissed 89 NY2d 1030 [1997]).

       As a side note, at least one commentary has noted that the Civil Court of the City of New York and District Courts in Nassau and Suffolk Counties have been inundated with lawsuits filed by medical providers seeking reimbursement of first-party benefits for services rendered to injured claimants. It attributes this “litigation explosion” to two factors: (1) the perception of the medical providers that the American Arbitration Association forum, where medical providers have traditionally filed claims, is biased in favor of the insurer; and (2) decisions of the courts over the past six or seven years which have been favorable to the medical providers (see Lustig and Schatz, Outside Counsel, The End of Litigation Explosion in New York No-Fault, NYLJ, June 21, 2007, at 4, col 4).


source: Caselaw Access Project

author: Jones, J.

license: Public Domain

text:
    [880 NE2d 416, 849 NYS2d 872]
    Joan Haymon, Individually and as Mother and Natural Guardian of L.H., an Infant, Appellant, v Donald J. Pettit et al., Defendants, and Auburn Community Non-Profit Baseball Association, Inc., Respondent.
    Argued October 18, 2007;
    decided November 20, 2007

      POINTS OF COUNSEL

      Damon & Morey LLP, Buffalo (Michael J. Willett and Steven M. Zweig of counsel), for appellant.
    I. Auburn Community NonProfit Baseball Association, Inc. owed a duty to the infant plaintiff to protect him from the dangerous condition it created by the manner in which it operated the stadium. (Weitzmann v Barber Asphalt Co., 190 NY 452; Gayden v City of Rochester, 148 AD2d 975; Dunbar v NMM Glens Falls Assoc., 263 AD2d 865; Leone v City of Utica, 66 AD2d 463, 49 NY2d 811; Vestal v County of Suffolk, 7 AD3d 613; Jones v Kane & Roach, Inc., 182 Misc 37; Gellman v Seawane Golf & Country Club, Inc., 24 AD3d 415; Varga v Parker, 136 AD2d 932; Boehm v Barnaba, 7 AD3d 911; Clifford v Woodlawn Volunteer Fire Co., Inc., 31 AD3d 1102.) II. Auburn Community Non-Profit Baseball Association, Inc. had a duty to provide an adequate degree of supervision over its promotion. (Caldwell v Village of Is. Park, 304 NY 268; Noeller v County of Erie, 145 AD2d 919; Curcio v City of New York, 275 NY 20; Genrich v Guary, 298 AD2d 919; Morbillo v Board of Educ. of Mt. Sinai School Dist., 269 AD2d 506; Joslyn v Village of Sylvan Beach, 256 AD2d 1166; Collentine v City of New York, 279 NY 119; Fritz v City of Buffalo, 277 NY 710; Nunez v Recreation Rooms & Settlement, 229 AD2d 359; Bongiorno v Wechter Fuel Oil Co., 30 AD2d 858, 26 NY2d 950.) III. Auburn Community Non-Profit Baseball Association, Inc. failed to meet its burden of establishing that its conduct was not a proximate cause of the accident. (Mason v U.E.S.S. Leasing Corp., 96 NY2d 875; Gordon v Eastern Ry. Supply, 82 NY2d 555; Rotz v City of New York, 143 AD2d 301; Derdiarian v Felix Contr. Corp., 51 NY2d 308; Fuller v Marcello, 17 AD3d 1017; Townsley v State of New York, 6 Misc 2d 557; Cruz v City of New York, 218 AD2d 546; Williams v Tennien, 294 AD2d 841;
      McMorrow v Trimper, 149 AD2d 971, 74 NY2d 830; Alami v Volkswagen of Am., 97 NY2d 281.)

      Roemer Wallens & Mineaux, LLP, Albany (Matthew J. Kelly and Amanda Davis Twinam of counsel), for respondent.
    I. Auburn Community Non-Profit Baseball Association, Inc. did not owe plaintiff infant a duty of care. (Hamilton v Beretta U.S.A. Corp., 96 NY2d 222; Lauer v City of New York, 95 NY2d 95; Pulka v Edelman, 40 NY2d 781; Palka v Servicemaster Mgt. Servs. Corp., 83 NY2d 579; Tobin v Grossman, 24 NY2d 609; Johnson v Jamaica Hosp., 62 NY2d 523; Maheshwari v City of New York, 2 NY3d 288; Akins v Glens Falls City School Dist., 53 NY2d 325; D'Amico v Christie, 71 NY2d 76; Purdy v Public Adm’r of County of Westchester, 72 NY2d 1.) II. Auburn Community Non-Profit Baseball Association, Inc.’s alleged negligence was not a proximate cause of plaintiff infant’s injuries. (Maheshwari v City of New York, 2 NY3d 288; Derdiarian v Felix Contr. Corp., 51 NY2d 308; Katz v Klagsbrun, 299 AD2d 317; Santodonato v Clear Channel Broadcasting, Inc., 26 AD3d 543; Di Ponzio v Riordan, 89 NY2d 578; Campbell v Central N.Y. Regional Transp. Auth., 7 NY3d 819; Boltax v Joy Day Camp, 67 NY2d 617; Creamer v Snediker, 274 AD2d 492; Miecznikowski v Robida, 278 AD2d 793; Alami v Volkswagen of Am., 97 NY2d 281.)
   OPINION OF THE COURT

Jones, J.

In this appeal we are asked to decide whether a baseball park operator owes a duty to warn or protect nonpatron spectators who are injured while chasing foul balls that are hit out of the stadium. Under the circumstances presented, we conclude that no duty exists.

Plaintiffs then 14-year-old son, L.H., was injured when he was struck by an automobile driven by defendant, Donald Pet-tit. Specifically, L.H. chased a foul ball into traffic. The record indicates that he was wearing headphones while chasing the ball and failed to look both ways before crossing the street. L.H. apparently neither saw nor heard the oncoming vehicle. Pettit was operating his vehicle with a blood alcohol level of .11%. At the time, L.H. had congregated with friends outside of Falcon Park, a baseball stadium owned by the City of Auburn and operated by defendant Auburn Community Non-Profit Baseball Association, Inc. (Ball Club). Adjoining the stadium on the third base side is a two-way public street across from which is a parking lot owned by the City of Auburn and utilized by fans during games. At the time of the incident, the Ball Club offered free baseball tickets to nonpatrons outside of the park who retrieved foul balls and returned them to the ticket window. Further, the record indicates that L.H. visited the stadium regularly to retrieve and collect foul balls hit out of the stadium.

L.H.’s mother commenced this negligence action individually and on L.H.’s behalf against defendants Ball Club, Donald Pet-tit and the City of Auburn, among others. The Ball Club moved for summary judgment dismissing the complaint on the ground that it owed no duty to plaintiffs son. Supreme Court denied the motion, finding that the Ball Club owed a duty to its fans outside the stadium “to prevent them from chasing foul balls into the nearby public street, a foreseeably dangerous condition it took part in creating.” The Appellate Division reversed and dismissed the complaint as to the Ball Club. The court determined that the Ball Club, “as an adjoining landowner [of a public street], owed no legal duty to plaintiffs son under the circumstances” despite the foreseeability that someone might run into the street to chase a foul ball (Haymon v Pettit, 37 AD3d 1194, 1195 [4th Dept 2007]). Two Justices dissented and voted to affirm on the ground that a duty existed due to the Ball Club’s foul ball promotion, which “played a significant role in creating the danger” (id.).

Plaintiff argues that the Ball Club’s foul ball promotion gave rise to a duty to warn or protect its participants. Specifically, plaintiff posits that a duty arose under these circumstances because the Ball Club provided an incentive to fans outside of the stadium to retrieve errant foul balls—namely, the prospect of free tickets. In short, plaintiff argues that the foreseeability of children chasing balls into the street, coupled with defendant’s incentive for them to do so, required the Ball Club to provide some measure of protection or warning. We disagree.

An owner or occupier of land generally owes no duty to warn or protect others from a dangerous condition on adjacent property unless the owner created or contributed to such a condition (see Galindo v Town of Clarkstown, 2 NY3d 633, 636 [2004]). “The reason for such a rule is obvious—a person who lacks ownership or control of property cannot fairly be held accountable for injuries resulting from a hazard” on neighboring property (id.). Thus, in fixing the duty point, our analysis is tempered by considerations such as “the reasonable expectations of parties and society generally, the proliferation of claims, the likelihood of unlimited or insurer-like liability, disproportionate risk and reparation allocation” (Hamilton v Beretta U.S.A. Corp., 96 NY2d 222, 232 [2001]; see also Darby v Compagnie Natl. Air France, 96 NY2d 343, 347 [2001] [duty must “comport with what is socially, culturally and economically acceptable”]).

In Akins v Glens Falls City School Dist. (53 NY2d 325 [1981]) we limited the duty of a baseball field owner/operator to provide screening for errant baseballs around “the most dangerous section of the field—the area behind home plate—and the screening that is provided must be sufficient for those spectators who may be reasonably anticipated to desire protected seats on an ordinary occasion” (id. at 330; see also Davidoff v Metropolitan Baseball Club, 61 NY2d 996, 997-998 [1984]). Although in Akins the injury occurred inside the baseball park, it is instructive nonetheless. Akins is premised on “the practical realities” (id. at 331) of the game—namely, that errant balls of any sort are an inherent part of the sport and that a baseball stadium owner/ operator “is not an insurer of the safety of its spectators” and can only be held to exercise reasonable care under the circumstances (id. at 329). Even inside the park, screening of the area behind home plate offers the most protection spectators could reasonably expect. The nature of the game—and the spectators’ involvement in it—is such that absolute protection around the entire stadium would be impractical. Any other formulation would defy a reasonable point at which duty can be fixed (see Darby, 96 NY2d at 349-350; Pulka v Edelman, 40 NY2d 781, 786 [1976]).

The same considerations govern this case. Here, plaintiffs theory rests upon defendant’s “foul ball return for tickets” promotion. Plaintiff insists that this incentive foreseeably exposed fans—mostly children—to the hazard of chasing foul balls into the street. This argument, however, is one of foreseeability presupposing that a duty exists (see Hamilton, 96 NY2d at 232). The dangers of crossing the street—and individuals electing to cross it in pursuit of foul balls—exist independent of the Ball Club’s promotion. This, coupled with the fact that the Ball Club could control neither the public street nor third persons who use it, strongly militates against a finding of duty.

Darby is also instructive. In that case, an individual drowned while swimming on a public beach in Brazil. He was a guest at a hotel which was separated from the beach by a four-lane public highway. The hotel actively encouraged guests to use the beach, and even provided them with umbrellas, towels and a security escort service. The hotel did not, however, warn beachgoers about dangerous surf conditions. Plaintiff sued the hotel on behalf of decedent alleging that it was negligent in failing to warn beachgoers of dangerous surf conditions. Concluding that no duty existed, we were unpersuaded by the fact that the hotel encouraged and facilitated use of the beach by providing certain related services, and we held that merely “[providing these services . . . does not make the hotel the insurer of its guests’ safety at a locale over which it ha[d] no control” (Darby, 96 NY2d at 349). Here, the Ball Club’s promotion did no more to contribute to an inherent risk than did the Meridien Copacabana Hotel in Darby.

The Court is mindful that, in this case—unlike Darby—the Ball Club rewarded participants of its promotion with tickets. Important to our resolution, however, is that under the circumstances of this case, like Darby, there are inherent risks associated with crossing the street. Those risks are multiplied when doing so indiscriminately. Moreover, we do not view the Ball Club’s promotion as contributing to a dangerous condition, for it only rewarded the retrieval of foul balls. We must assume that adults, and children of L.H.’s age, will act prudently in doing so.

Even assuming that mere encouragement of retrieving foul balls suffices, under the circumstances, to create—or contribute to—a dangerous condition (cf. Griffin v 19-20 Indus. City Assoc., LLC, 37 AD3d 412 [2d Dept 2007]), a finding of duty would still be inappropriate. As in Akins, “the practical realities” of the game are not lost on the fact that players hit balls outside of the park. Foul balls can land on virtually any square foot of property surrounding a stadium, and imposition of a duty to warn or protect under such circumstances is neither fair nor practical (see Akins, 53 NY2d at 330; see also Starke v Town of Smithtown, 155 AD2d 526, 527 [2d Dept 1989]; Clark v Goshen Sunday Morning Softball League, 122 AD2d 769, 770 [2d Dept 1986]). Injury may befall someone—as in this case—as a result of conduct of a third person on a public road, or a group of fans in a struggle for the ball. The possibilities for injury—and consequently, for liability—are limitless, and the expectation that the stadium control the conduct of third persons is unrealistic (see Pulka, 40 NY2d at 785 [unreasonable to impose duty to protect from the negligent conduct of another “where the realities of every day experience show us that, regardless of the measures taken, there is little expectation that the one made responsible could prevent the negligent conduct”]).

Under these circumstances, it is difficult to imagine what steps the stadium operator could have taken that would have sufficed to meet a duty. Thus, we are constrained from imposing a requirement that the stadium exercise control over nonpatron, third persons outside its premises over whom it has no actual authority to do so.

Accordingly, the order of the Appellate Division should be affirmed, with costs.

Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.

Order affirmed, with costs.

       There is scant evidence in the record on this motion for summary judgment indicating whether or not L.H. even engaged in this activity for the purpose of receiving free tickets pursuant to the Ball Club’s promotion. L.H.’s sister testified that he left the house to go to the stadium, that he had money but “didn’t want to spend it,” and that he did not have a ticket but that “he had his glove with him” to try “to catch [a foul] ball.” The sister added that L.H. “saved baseballs.” Even viewing the evidence in a light most favorable to the nonmoving party and giving the nonmoving party the benefit of all reasonable inferences which can be drawn from the evidence (see Fundamental Portfolio Advisors, Inc. v Tocqueville Asset Mgt., L.P., 7 NY3d 96 [2006]), it is unclear whether plaintiff has succeeded in raising an issue of fact. Nevertheless, this becomes academic in light of our holding.


author: Smith, J.

text:
    [879 NE2d 733, 849 NYS2d 194]
    In the Matter of Nicholas Schreiber, Respondent-Appellant, v K-Sea Transportation Corp. et al., Appellants-Respondents.
    Argued October 10, 2007;
    decided November 27, 2007

      POINTS OF COUNSEL

      Freehill, Hogan & Mahar, New York City (Thomas M. Canevari and Michael C. Elliott of counsel), for appellants-respondents.
    The arbitration agreement between Nicholas Schreiber and K-Sea Transportation Corp. was valid under the Federal Arbitration Act, thus the burden to avoid arbitration rests with the party challenging arbitration. (State of New York v Oneida Indian Nation of N.Y, 90 F3d 58; Joseph Muller Corp. Zurich v Commonwealth Petrochemicals, Inc., 334 F Supp 1013; Shearson/American Express Inc. v McMahon, 482 US 220; Terrebonne v K-Sea Transp. Corp., 477 F3d 271; Green Tree Financial Corp.-Ala. v Randolph, 531 US 79; National Iranian Oil Co. v Ashland Oil, Inc., 817 F2d 326; DeGraziano v Verizon Communications, Inc., 325 F Supp 2d 238; Genesco, Inc. v T. Kakiuchi & Co., Ltd., 815 F2d 840; Gilmer v Interstate/Johnson Lane Corp., 500 US 20.)

      Law Offices of Sanford F. Young, P.C., New York City (Sanford F. Young of counsel), and Law Office of Steven Thaler, P.C. (Steven Thaler of counsel) for respondent-appellant.
    I. The claims arbitration agreement is unenforceable as a matter of law. (Chandris, Inc. v Latsis, 515 US 347; American Dredging Co. v Miller, 510 US 443; O’Hara v Weeks Mar., Inc., 294 F3d 55; Fitzgerald v United States Lines Co., 374 US 16; Circuit City Stores, Inc. v Adams, 532 US 105; Jacob v City of New York, 315 US 752; Fisher v Nichols, 81 F3d 319; Aguilar v Standard Oil Co. of N. J, 318 US 724; Nasser v CSX Lines, LLC, 191 F Supp 2d 307; Brinson v Linda Rose Joint Venture, 53 F3d 1044.) II. The Supreme Court correctly found that Nicholas Schreiber unknowingly assumed “a financial burden disproportionate to his ability to pay.” (Ball v SFX Broadcasting, Inc., 165 F Supp 2d 230; Res v Masterworks Dev. Corp., 5 Misc 3d 1003[A], 2004 NY Slip Op 51169[U]; Parilla v IAP Worldwide Servs., VI, Inc., 368 F3d 269; Shankle v B-G Maintenance Mgt. of Colo., Inc., 163 F3d 1230; Phillips v Associates Home Equity Servs., Inc., 179 F Supp 2d 840; Perez v Hospitality Ventures-Denver LLC, 245 F Supp 2d 1172; Torrance v Aames Funding Corp., 242 F Supp 2d 862; Cooper v MRM Inv. Co., 199 F Supp 2d 771; Green Tree Financial Corp.-Ala. v Randolph, 531 US 79; Garrett v Moore-McCormack Co., 317 US 239.) III. The Supreme Court’s decision should be reinstated or, alternatively, the matter remanded per the Appellate Division’s decision.

      Friedman & James LLP, New York City (John P. James of counsel), James P. Jacobsen, Seattle, Washington, Kathleen Flynn Peterson, Minneapolis, Minnesota, and Ross Diamond, Mobile, Alabama, for American Association for Justice, amicus curiae.
    I. The Federal Employers’ Liability Act applies to this case. (American Dredging Co. v Miller, 510 US 443; Cox v Roth, 348 US 207; Kernan v American Dredging Co., 355 US 426; Garrett v Moore-McCormack Co., 317 US 239.) II. The arbitration agreement is a “devise” intended to eliminate the seaman’s statutory rights to file his case in state or federal court and is therefore void. (Engel v Davenport, 271 US 33; Second Employers’ Liability Cases, 223 US 1; Burnett v New York Central R. Co., 380 US 424; Philadelphia, B. & W. R. Co. v Schubert, 224 US 603; Duncan v Thompson, 315 US 1; Boyd v Grand Trunk Western R. Co., 338 US 263.) III. The Alaska Supreme Court has recently correctly applied Boyd v Grand Trunk Western R. Co. (338 US 263 [1949]). (Brooks v Maersk Line, Ltd., 396 F Supp 2d 711.) IV The United States Court of Appeals case relied upon by the employer was wrongly decided and is not binding upon this Court. (Terrebonne v K-Sea Transp. Corp., 477 F3d 271; Boyd v Grand Trunk Western R. Co., 338 US 263; Miles v Illinois Cent. R. Co., 315 US 698; Bainbridge v Merchants & Miners Transp. Co., 287 US 278; Akerly v New York Cent. R.R. Co., 168 F2d 812; Brooklyn Savings Bank v O’Neil, 324 US 697.) .
   OPINION OF THE COURT

Smith, J.

The issue is the validity of a seaman’s agreement to arbitrate his Jones Act claim against his employer, where the agreement was made after the seaman was injured. We hold, as did the Appellate Division, that post-injury arbitration agreements are not prohibited, but that a hearing should be held to decide whether this arbitration agreement is enforceable. We disagree with the Appellate Division as to the burden of proof at the hearing; the burden should be on the party trying to invalidate the arbitration agreement.

Facts and Procedural History

Nicholas Schreiber was injured while working aboard the tug Tasman Sea, owned by K-Sea Transportation Corp. Under admiralty law, Schreiber was entitled to “maintenance” from K-Sea (payments sufficient to provide him with food and lodging) while his injury prevented him from working. He was also entitled to sue K-Sea under the Jones Act (46 USC § 30104) if K-Sea’s negligence caused his injury. K-Sea, pursuant to its interpretation of its collective bargaining agreement with Schreiber’s union, began making maintenance payments to him of $15 per day.

Several weeks after the accident, K-Sea’s claims manager, Alton Peralta, called Schreiber and made a proposal: K-Sea would increase its payments to two thirds of Schreiber’s regular wage, as an advance against settlement of any claims by Schreiber based on his injury, if Schreiber would agree to arbitrate those claims. Schreiber agreed, and Peralta sent him a written agreement with a short cover letter. The cover letter explained: “arbitration is a private process, and the outcome will be decided by one or more arbitrators, not by a jury.” The cover letter also told Schreiber, in bold letters: “You are not obligated to sign the Agreement. You will continue to receive $15/day as maintenance, and medical cure at the Company’s expense until you are fit for duty and/or reach maximum medical improvement, whether you sign the Agreement or not.”

Schreiber signed the agreement. It provided that he and K-Sea agreed to arbitrate all claims arising out of his injury under the rules of the American Arbitration Association (AAA). The agreement also provided: “Any filing fee, up to $750.00 and any deposit for compensation of the arbitrators shall be advanced by K-Sea, subject to subsequent allocation.”

At the time of the agreement, Schreiber apparently expected to recover well from his injury. But the injury worsened, leaving him confined to a walking boot and unlikely ever to return to working at sea. Some 17 months after the injury, Schreiber sued K-Sea in Supreme Court, asserting Jones Act and other claims. K-Sea filed a demand for arbitration with the AAA, and sent the AAA a check for $750 “as K-Sea’s portion of the filing fee.” Its letter told the AAA that “the remainder of the filing fee is to be provided by Mr. Schreiber.” The AAA responded by telling the parties that, since the amount of the claim was not stated in the demand, the minimum filing fee would be $10,000.

Schreiber petitioned Supreme Court to stay arbitration, and K-Sea cross-moved to compel arbitration. Supreme Court granted Schreiber’s petition. It rejected Schreiber’s claim that the Federal Arbitration Act (FAA) rendered the agreement unenforceable, but held that K-Sea had failed to prove “that there was no deception or coercion on its part, and that Schreiber understood his obligations under the agreement” (2004 NY Slip Op 30151[U], *8). The Appellate Division, one Justice dissenting in part, reversed and directed a hearing on whether the agreement was enforceable. The Appellate Division majority concluded, as had Supreme Court, that K-Sea had an “obligation to show that the arbitration agreement is equitable,” but found the issue could not be resolved without a hearing (30 AD3d 101, 110 [2006]). Justice Andrias, dissenting, said the burden should be on Schreiber to demonstrate the invalidity of the arbitration agreement and concluded that, since he had not met that burden, arbitration should be compelled, though Schreiber should not be required to pay the $9,250 balance of the filing fee. The Appellate Division granted both parties leave to appeal.

The three opinions below reached three different conclusions, and we reach a fourth: There should be a hearing, at which the burden should be on Schreiber to show that the arbitration agreement is unenforceable. Though the Appellate Division erred in allocating the burden of proof, its order simply remands the case for a hearing, and we therefore affirm that order.

Discussion

Schreiber argues that the FAA forbids enforcement of the arbitration agreement; that the Federal Employers’ Liability Act (FELA) also forbids it; and that, even if enforcement of the arbitration agreement is not barred by statute, it is barred by his status as a “ward of the admiralty.” We reject all three arguments, but decide that the facts of this case warrant ordering a hearing on the agreement’s enforceability.

I

Section 2 of the FAA (9 USC § 2) provides:

“A written provision in any maritime transaction or a contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction, or the refusal to perform the whole or any part thereof, or an agreement in writing to submit to arbitration an existing controversy arising out of such a contract, transaction, or refusal, shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.”

This section reflects a federal policy favoring the arbitration of disputes (Moses H. Cone Memorial Hospital v Mercury Constr. Corp., 460 US 1, 24-25 [1983]). The policy is applicable even to claims arising under protective statutes like the Jones Act (see Gilmer v Interstate/Johnson Lane Corp., 500 US 20, 26 [1991] [“statutory claims may be the subject of an arbitration agreement, enforceable pursuant to the FAA . . . (because by) agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial, forum” (internal quotation marks and citation omitted)]; Fletcher v Kidder, Peabody & Co., 81 NY2d 623, 635 [1993]). Section 1 of the FAA (9 USC § 1), however, excludes from the scope of the FAA “contracts of employment of seamen.” Schreiber argues that the arbitration agreement between him and K-Sea is part of his contract of employment and is therefore excluded from the FAA’s coverage. He also argues that the exclusion implies a prohibition—i.e., that an arbitration agreement excluded from the FAA’s coverage is unenforceable, even if it would otherwise be enforceable under state law.

We need not decide whether Schreiber is right about the enforceability of agreements excluded from the FAA by section 1 (see O’Dean v Tropicana Cruises Intl. Inc., 1999 WL 335381, *1-2, 1999 US Dist LEXIS 7751, *3-4 [SD NY 1999] [holding an excluded agreement not inherently unenforceable]) because the agreement at issue here is not excluded from the FAA. It is not a “contract of employment”; it is a separate agreement, made after K-Sea had employed Schreiber, at a time when the occasion for arbitration—Schreiber’s injury—already existed. We agree with all other courts to consider the question that an agreement like this is within the coverage of the FAA (see Terrebonne v K-Sea Transp. Corp., 477 F3d 271, 278-280 [5th Cir 2007]; Nunez v Weeks Mar., Inc., 2007 WL 496855, *1-5, 2007 US Dist LEXIS 10807, *4-19 [ED La 2007]; Barbieri v K-Sea Transp. Corp., 2006 WL 3751215, *7-8, 2006 US Dist LEXIS 91565, *21-26 [ED NY 2006]; Endriss v Eklof Mar. Corp., 1998 WL 1085911, *4, 1998 US Dist LEXIS 23231, *12-16 [SD NY 1998]).

II

The FELA is relevant here because the Jones Act says that “[l]aws of the United States regulating recovery for personal injury to ... a railway employee apply” to a Jones Act claim (46 USC § 30104 [a]). Section 5 of the FELA says that “[a]ny contract . . . the purpose or intent of which shall be to enable any common carrier to exempt itself from any liability created by this chapter, shall to that extent be void” (45 USC § 55). On its face, this statute seems to pose no problem here, because K-Sea’s contract with Schreiber does not purport to “exempt” K-Sea from “liability,” but only to require that Schreiber’s claim be arbitrated. In Boyd v Grand Trunk Western R. Co. (338 US 263 [1949]), however, the Supreme Court gave a broad reading to section 5 of the FELA, holding that an agreement limiting an employee’s choice of forum to a state or federal court in Michigan was void, on the theory that being subject to suit in a court of the employee’s choice was part of the “liability created.” Schreiber argues that the arbitration clause here is similar to the venue-selection clause in Boyd, since both clauses limit litigation to a particular forum.

We reject the analogy because there is a factor here not present in Boyd: the federal policy favoring arbitration. To hold, as Schreiber urges, that any agreement to arbitrate a Jones Act claim is void would contradict that policy. We therefore conclude that an arbitration agreement is not a forbidden exemption from Jones Act liability. Again, the other courts to consider this question have reached the same conclusion (Terrebonne, 477 F3d at 280-286; Nunez, 2007 WL 496855, *5-6, 2007 US Dist LEXIS 10807, *20-22).

Ill

As an alternative to his argument that federal statutes render the arbitration agreement void, Schreiber suggests that, because seamen are “wards of the admiralty,” a contract between a seaman and his employer should be treated in the same way as, for example, a contract between a beneficiary and a trustee—i.e., that such a contract is invalid unless it is shown to be fair to the seaman and untainted by deception, duress or any other factor that might bar its enforcement in equity. The “ward of the admiralty” doctrine was stated by Justice Story in Harden v Gordon (11 F Cas 480, 485 [D Me 1823]) in this way:

“[Seamen] are emphatically the wards of the admiralty; and though not technically incapable of entering into a valid contract, they are treated in the same manner, as courts of equity are accustomed to treat young heirs, dealing with their expectancies, wards with their guardians, and cestuis que trust with their trustees. They are considered as placed under the dominion and influence of men, who have naturally acquired a mastery over them; and as they have little of the foresight and caution belonging to persons trained in other pursuits of life, the most rigid scrutiny is instituted into the terms of every contract, in which they engage. If there is any undue inequality in the terms, any disproportion in the bargain, any sacrifice of rights on one side which are not compensated by extraordinary benefits on the other, the judicial interpretation of the transaction, is that the bargain is unjust and unreasonable, that advantage has been taken of the situation of the weaker party, and that pro tanto the bargain ought to be set aside as inequitable. . . . And on every occasion the court expects to be satisfied, that the compensation for every material alteration is entirely adequate to the diminution of right or privilege on the part of the seamen.”

In Garrett v Moore-McCormack Co. (317 US 239, 247 [1942]), Justice Black quoted some of the above words of Justice Story, and added:

“The analogy . . . between seamen’s contracts and those of fiduciaries and beneficiaries remains, under the prevailing rule treating seamen as wards of admiralty, a close one. Whether the transaction under consideration is a contract, sale, or gift between guardian and ward or between trustee and cestui, the burden of proving its validity is on the fiduciary. He must affirmatively show that no advantage has been taken; and his burden is particularly heavy where there has been inadequacy of consideration.”

K-Sea argues, in substance, that Justice Story’s words of 1823, and even Justice Black’s of 1942, are out of date. And indeed, there is something antiquated in the idea that seamen are less capable than other people of making contracts for themselves. Surely most seamen today are as intelligent and responsible as most others; the record shows that Schreiber himself writes lucid English, uses a computer, and has been involved in some business ventures. The federal courts have not, however, abandoned the “ward of the admiralty” doctrine, though it has shown some signs of erosion (see Brinson v Linda Rose Joint Venture, 53 F3d 1044, 1048 [9th Cir 1995]).

The issue here is not the vitality of the “ward of the admiralty” doctrine in general, but whether it outweighs the policy favoring arbitration. We hold that it does not. Section 2 of the FAA says that an agreement to arbitrate “shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract” (9 USC § 2). The implication is that the party challenging the enforceability of an arbitration agreement has the burden of showing “grounds” for its “revocation.” That burden is not shifted simply because the objecting party is a seaman. Schreiber is bound by his agreement with K-Sea unless he can show that fraud, unconscionability or some other defect justifies invalidating it.

IV

Though we agree with Justice Andrias, the dissenter in the Appellate Division, that the agreement here is, like other arbitration agreements, presumptively valid, we do not agree with Justice Andrias’s conclusion that the result should be to compel arbitration without an evidentiary hearing. While Schreiber must bear the burden of proving the agreement invalid, the record does not conclusively show that he cannot do so.

There is no evidence that Peralta misled or intimidated Schreiber in their telephone conversation, and the cover letter he sent to Schreiber with the proposed agreement clearly explains the choice Schreiber had to make—including his choice, if he signed the agreement, to give up his right to a jury trial. There is, however, one troubling aspect of the agreement itself: the statement that K-Sea would advance any filing fee “up to $750.00.” Anyone reading this statement in context would infer that the fee was likely to be around $750 or less—but the fee actually demanded by the AAA was $10,000. If K-Sea expected the fee to be so far in excess of the one mentioned in the agreement—and so far in excess of what most seamen can afford—a factfinder might conclude that K-Sea deceived Schreiber into signing. If Supreme Court finds that K-Sea intentionally misled Schreiber, and that if correctly informed he would not have agreed to arbitration, the arbitration agreement should be set aside. We imply no prejudgment of the issue: a hearing may well show that K-Sea acted in complete good faith. But there should be a hearing, at which the question is answered one way or the other (see Barbieri, 2006 WL 3751215, *9, 2006 US Dist LEXIS 91565, *29-32 [reaching a similar conclusion on almost identical facts]).

If Schreiber fails to show at the hearing that K-Sea obtained his agreement by intentionally deceiving him, Supreme Court should compel arbitration. Even in that event, however, Schreiber should not be compelled to bear costs which would effectively preclude him from pursuing his claim (see Green Tree Financial Corp.-Ala. v Randolph, 531 US 79, 92 [2000]). Thus, any order compelling arbitration should be conditioned on K-Sea’s agreement to bear any costs not waived by the AAA, subject later to reallocation of those costs by the arbitrator.

Accordingly, the order of the Appellate Division should be affirmed, without costs, and the certified question answered in the affirmative.

Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Pigott and Jones concur.

Order affirmed, etc.


author: Chief Judge Kaye.

text:
    [880 NE2d 1, 849 NYS2d 480]
    The People of the State of New York, Respondent, v Khalil Danielson, Also Known as Khali Danielson, Appellant. The People of the State of New York, Respondent, v Alexander Pasley, Appellant.
    Argued November 14, 2007;
    decided December 13, 2007

      POINTS OF COUNSEL

      James E. Neuman, New York City, for appellant in the first above-entitled action.
    I. Because the Appellate Division incorrectly assumed that its “weight of the evidence” review power was limited to a review of the credibility of the witnesses, the matter should be remanded. (People v Romero, 7 NY3d 633; People v Crum, 272 NY 348; People v Bleakley, 69 NY2d 490; People v Mateo, 2 NY3d 383; People v Gray, 86 NY2d 10; People v Acosta, 80 NY2d 665; People v Cahill, 2 NY3d 14; People v Noble, 86 NY2d 814; People v Cooper, 88 NY2d 1056; People v Foster, 64 NY2d 1144.) II. The Appellate Division incorrectly evaluated the weight of the evidence according to the law at the time of the trial, rather than the law at the time of the appeal, and in doing so, gave undue deference to the jury’s determination of the mens rea element of depraved indifference murder. (People v Register, 60 NY2d 270; People v Favor, 82 NY2d 254; People v Morales, 37 NY2d 262; People v Kramer, 267 AD2d 328; Policano v Herbert, 7 NY3d 588; People v Sanchez, 98 NY2d 373; People v Feingold, 7 NY3d 288; People v Flack, 125 NY 324; People v Hafeez, 100 NY2d 253; People v Payne, 3 NY3d 266.) III. Defendant was deprived of his state and federally guaranteed rights to effective assistance of counsel when his trial lawyer, while moving to dismiss for legal insufficiency, failed to specify an argument that would have prevailed on appeal. (United States v Cronic, 466 US 648; People v Claudio, 83 NY2d 76; People v DeFreitas, 213 AD2d 96; Strickland v Washington, 466 US 668; Kimmelman v Morrison, 477 US 365; United States v Tarricone, 21 F3d 474; Quartararo v Fogg, 679 F Supp 212; Fos

      ter v Lockhart, 9 F3d 722; People v Baldi, 54 NY2d 137; People v Hobot, 84 NY2d 1021.)

      Robert T. Johnson, District Attorney, Bronx (T. Charles Won, Joseph N. Ferdenzi and Nancy D. Killian of counsel), for respon-
    dent in the first above-entitled action.
    I. The Appellate Division applied correct legal principles in deciding that the weight of the evidence supported the guilty verdict. (People v Suarez, 6 NY3d 202; People v Romero, 7 NY3d 633; People v Bleakley, 69 NY2d 490; People v Cahill, 2 NY3d 14; People v Crum, 272 NY 348; People v Carthrens, 182 AD2d 460; People v Roberts, 165 AD2d 598; People v Al-Sullami, 162 AD2d 691; People v Gonzalez, 1 NY3d 464; People v Cooper, 88 NY2d 1056.) II. Defendant received meaningful representation. (People v Brown, 45 NY2d 852; People v Baldi, 54 NY2d 137; People v Benevento, 91 NY2d 708; People v Rivera, 71 NY2d 705; People v Caban, 5 NY3d 143; People v Stultz, 2 NY3d 277; Strickland v Washington, 466 US 668; Lockhart v Fretwell, 506 US 364; People v Register, 60 NY2d 270; Policano v Herbert, 7 NY3d 588.)

      Center for Appellate Litigation, New York City (Abigail Everett and Robert S. Dean of counsel), for appellant in the second above-entitled action.
    The appeal should be remanded to the Appellate Division for further consideration because (a) the Appellate Division failed to exercise the “full” scope of its constitutionally-mandated “weight-of-the-evidence review” (NY Const, art VI, § 4; CPL 470.15 [5]) and (b) to the extent that the Appellate Division did weigh the evidence, it should have followed the court’s charge according to current law, particularly since the court told the jury that “depraved indifference to human life” was the required “mental state.” (People v Gray, 86 NY2d 10; People v Patterson, 38 AD3d 431; People v Pollenz, 67 NY2d 264; People v Noble, 86 NY2d 814; People v Suarez, 6 NY3d 202; People v Gonzalez, 1 NY3d 464; People v Hafeez, 100 NY2d 253; People v Feingold, 7 NY3d 288; People v Register, 60 NY2d 270; People v Bleakley, 69 NY2d 490.)

      Robert M. Morgenthau, District Attorney, New York City (Vincent Rivellese and Mark Dwyer of counsel), for respondent in the second above-entitled action.
    The Appellate Division’s express finding that the verdict was not against the weight of the evidence should not be disturbed. (People v Register, 60 NY2d 270; People v Sanchez, 98 NY2d 373; People v Gallagher, 69 NY2d 525; Policano v Herbert, 7 NY3d 588; People v Hafeez, 100 NY2d 253; People v Gonzalez, 1 NY3d 464; People v Payne, 3 NY3d 266; People v Suarez, 6 NY3d 202; People v Feingold, 7 NY3d 288; People v Danielson, 40 AD3d 174.)
   OPINION OF THE COURT

Chief Judge Kaye.

These two appeals call upon us to determine the scope of weight of the evidence review when a defendant has failed to preserve a challenge to the legal sufficiency of his conviction. In particular, we are asked whether weight of the evidence review requires assessment of the elements of the crime for which defendant is convicted, or whether such review would simply be tantamount to back-door sufficiency review.

Facts

In the first of the two appeals, People v Danielson, the People presented evidence at trial that defendant, together with fellow gang members Gerard Miller and Omari Green, plotted to kill Kenneth Andrews for “false flagging”—wearing a rival gang’s bandana. The three arranged to take Andrews to a secluded area in Seton Falls Park in the Bronx to murder him.

The next day in the park, the group (including other residents of the group home in which they all lived) drank alcohol and smoked cigarettes and marijuana. Later, defendant, Miller and Green argued with Andrews about his false flagging, and the three shot Andrews. One of the group members not involved in the shooting testified that defendant was the first to draw his pistol and shoot Andrews eight times from about two feet away; that Miller next drew his handgun and shot the victim; and that Miller passed his firearm to Green, who shot Andrews once in the head. Green, also a prosecution witness, testified that Miller drew his weapon first and fired the eight shots; that defendant drew his pistol and shot Andrews four times; and that Miller passed Green his handgun, and Green shot Andrews in the head as Andrews lay on the ground. A medical examiner testified the cause of death was a shot either to Andrews’ head or to his abdomen.

A grand jury indicted defendant, Miller and Green for acting in concert to commit two counts of murder in the second degree (intentional and depraved indifference) and additional charges. At defendant’s trial, defense counsel never claimed that the evidence proved only an intentional killing. The trial court, without objection, charged the jury on both intentional and depraved indifference murder as defined by People v Register (60 NY2d 270 [1983]). The jury acquitted defendant of intentional murder but convicted him of depraved indifference murder.

The Appellate Division affirmed defendant’s conviction, one Justice dissenting. Although all five Justices recognized that defendant had not preserved a legal sufficiency claim, they disagreed on how to perform the weight of the evidence review. The majority noted that, on appeal, defendant had argued only that the evidence did not support the verdict because of inconsistencies in the testimony; he did not claim that the weight of the evidence proved only intentional murder. Thus, limiting its consideration to defendant’s appellate argument, the court confined its weight review to credibility issues and concluded that, though the witnesses recalled defendant’s actions during the crime differently, the evidence nonetheless supported the jury’s verdict. In dissent, Justice Mazzarelli urged that a reviewing court must weigh the evidence in light of the elements of the crime and that the evidence here could support only intentional murder. Justice Mazzarelli granted leave to appeal to this Court.

In the second appeal, People v Pasley, the People presented evidence that a group of friends, after taking the subway from Brooklyn to Manhattan’s Times Square, encountered defendant coming up the staircase at the 42nd Street subway station. After pushing between the victim, Michael Bishop, and another member of the group, defendant demanded Bishop’s chain, reached for it and then with his other hand made a quick slashing motion across Bishop’s neck. Defendant fled. When the police caught defendant, they recovered the chain from his pocket, and later discovered a bloody box cutter in the back of the patrol car in which he had been taken to the precinct. Bishop bled to death.

Defendant testified that, while on the subway ride from Brooklyn to Manhattan, he had an argument with one of the group members. Fearing for his safety, defendant, at the 42nd Street station, waited for the group by the token booth. As the men in the group surrounded him, defendant put his hand in his pocket. Defendant thought he saw something silver in Bishop’s hand, so he preemptively started swinging his box cutter at the group. Defendant denied that he intended to rob anyone but could not explain how Bishop’s chain wound up in his pocket. A grand jury indicted defendant for, among other charges, murder in the first degree (intentional felony murder) and three counts of murder in the second degree (intentional, depraved indifference and felony murder). At trial, defense counsel did not argue that the evidence proved only an intentional homicide. The trial court, in accordance with Register, charged the jury that depraved indifference murder required a reckless mens rea with objective circumstances showing “a depraved indifference to human life.”

The jury acquitted defendant of first-degree and second-degree intentional murder but convicted him of depraved indifference murder. Prior to sentencing, defendant filed a CPL 330.30 motion claiming that the evidence supported only an intentional murder theory, and that the evidence was legally insufficient to support depraved indifference murder, for the first time citing People v Hafeez (100 NY2d 253 [2003]). The trial court denied the motion. On appeal, defendant argued that the evidence supported only a theory of intentional murder or at most reckless, not depraved indifference, murder. The Appellate Division affirmed defendant’s conviction. The majority refused to conduct an element-based weight of the evidence review since defendant failed to preserve his legal sufficiency claim. Instead, it weighed witness credibility and determined that the conviction was not against the weight of the evidence. Justice Mazzarelli concurred, concluding that even using an element-based weight review, defendant’s conviction was proper, and she granted leave to appeal to this Court.

Analysis

Upon defendant’s request, the Appellate Division must conduct a weight of the evidence review (CPL 470.15 [5]; People v Romero, 7 NY3d 633, 636 [2006]; see Karger, Powers of the New York Court of Appeals § 13:7, at 473 [3d ed rev]). Thus, a defendant will be given one appellate review of adverse factual findings.

As we recently made clear in Romero, weight of the evidence review requires a court first to determine whether an acquittal would not have been unreasonable. If so, the court must weigh conflicting testimony, review any rational inferences that may be drawn from the evidence and evaluate the strength of such conclusions. Based on the weight of the credible evidence, the court then decides whether the jury was justified in finding the defendant guilty beyond a reasonable doubt (People v Crum, 272 NY 348 [1936]).

Essentially, the court sits as a thirteenth juror and decides which facts were proven at trial (see Tibbs v Florida, 457 US 31, 42 [1982]). Necessarily, in conducting its weight of the evidence review, a court must consider the elements of the crime, for even if the prosecution’s witnesses were credible their testimony must prove the elements of the crime beyond a reasonable doubt. Sitting as the thirteenth juror, moreover, the reviewing court must weigh the evidence in light of the elements of the crime as charged to the other jurors, even when the law has changed between the time of trial and the time of appeal (People v Noble, 86 NY2d 814, 815 [1995]).

A verdict is legally sufficient when, viewing the facts in a light most favorable to the People, “there is a valid line of reasoning and permissible inferences from which a rational jury could have found the elements of the crime proved beyond a reasonable doubt” (People v Acosta, 80 NY2d 665, 672 [1993], quoting People v Steinberg, 79 NY2d 673, 681-682 [1992]). A sufficiency inquiry requires a court to marshal competent facts most favorable to the People and determine whether, as a matter of law, a jury could logically conclude that the People sustained its burden of proof.

A legally sufficient verdict can be against the weight of the evidence (see e.g. People v Cahill, 2 NY3d 14, 62 [2003] [a capital case where we concluded that the witness-elimination murder charge was legally sufficient but against the weight of the evidence]). In noncapital cases, this Court is without authority to review the Appellate Division’s weight of the evidence determination (Karger, Powers of the New York Court of Appeals § 21:6, at 754). When the Appellate Division has not properly conducted that review, we reverse and remit to that court (People v Bleakley, 69 NY2d 490, 496 [1987]).

Applying the foregoing principles, we now affirm the order of the Appellate Division in Danielson, and reverse and remit in Pasley.

In Danielson, although the Appellate Division majority incorrectly concluded that it was unnecessary to conduct element-based review, it did alternatively consider the credible evidence, conflicting testimony and inferences that could be drawn from the evidence. Viewing that evidence in light of the elements as charged at trial, the majority concluded that the jury correctly weighed the evidence when it convicted defendant of depraved indifference murder. Because the majority conducted a weight of the evidence review, we affirm. We cannot reach that same conclusion in Pasley. A fair reading of the decision indicates that the court limited its weight of the evidence review to credibility issues and failed to weigh the conflicting testimony and conflicting inferences in light of the elements as charged at trial. We must, therefore, reverse defendant’s conviction and remit to that court for a weight of the evidence review.

Finally, in both cases we reject defendants’ claimed ineffective assistance of counsel for failure to raise a legal sufficiency argument. In Danielson, under the law at the time of trial, circumstantial evidence of intent would still have supported a depraved indifference murder verdict. Similarly in Pasley, the jury could have inferred that defendant did not intend to kill Bishop when he indiscriminately swung the box cutter at the group.

Accordingly, in People v Danielson, the order of the Appellate Division should be affirmed. In People v Pasley, the order of the Appellate Division should be reversed and the case remitted to the Appellate Division for further proceedings in accordance with this opinion.

Judges Ciparick, Graffeo, Read, Smith, Pigott and Jones concur.

In People v Danielson: Order affirmed.

In People v Pasley. Order reversed, etc.


text:
    [880 NE2d 845, 850 NYS2d 359]
    Brent F. Fung et al., Appellants, v Japan Airlines Company, Ltd., et al., Defendants, and Japan Airlines Management Corp., Respondent. (And Third-Party Actions.) Brent F. Fung et al., Appellants, v Aero Snow Removal Corp., Respondent.
    Argued November 14, 2007;
    decided December 13, 2007

      POINTS OF COUNSEL

      Pollack, Pollack, Isaac & DeCicco, New York City (Brian J. Isaac of counsel), and Edelman, Krasin & Jaye, PLLC (Paul

      Edelman and Lawrence Krasin of counsel), for appellants.
    I. The action against Japan Airlines Management Corp. is not barred by the Workers’ Compensation Law. (Andre v Pomeroy, 35 NY2d 361; Cahill v Triborough Bridge & Tunnel Auth., 4 NY3d 35; Giuffrida v Citibank Corp., 100 NY2d 72; Alvarez v Prospect Hosp., 68 NY2d 320; Winegrad v New York Univ. Med. Ctr., 64 NY2d 851; Zuckerman v City of New York, 49 NY2d 557; Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395; Olan v Farrell Lines, 64 NY2d 1092; Merritt Hill Vineyards v Windy Hgts. Vineyard, 61 NY2d 106; Springsteen v Samson, 32 NY 703.) II. There was evidence that Aero Snow Removal Corp. salted and sanded the parking lot and thereby made it more dangerous than it would otherwise have been. (Hamilton v Beretta U.S.A. Corp., 96 NY2d 222; Martin v Herzog, 228 NY 164; Eiseman v State of New York, 70 NY2d 175; Turcotte v Fell, 68 NY2d 432; Akins v Glens Falls City School Dist., 53 NY2d 325; Palsgraf v Long Is. R.R. Co., 248 NY 339; De Angelis v Lutheran Med. Ctr., 58 NY2d 1053; Waters v New York City Hous. Auth., 69 NY2d 225; Pulka v Edelman, 40 NY2d 781; Tobin v Grossman, 24 NY2d 609.)

      Brown Gavalas & Fromm LLP, New York City (David H. Fromm, Robert J. Brown and Fred G. Wexler of counsel), for Aero Snow Removal Corp., respondent.
    Aero Snow Removal Corp. owed no legal duty to plaintiffs. (Smelley v Ahmed, 3 AD3d 559; Castro v Maple Run Condominium Assn., 41 AD3d 412; Zuckerman v City of New York, 49 NY2d 557; Nicholas v EPO-Harvey Apts., Ltd. Partnership, 31 AD3d 1174; Rector v City of New York, 259 AD2d 319; Pinn v Baker’s Variety, 32 AD3d 463; Yaeger v UCC Constructors, 281 AD2d 990; Forester v Golub Corp., 267 AD2d 526; Otonoga v City of New York, 234 AD2d 592; Bugiada v Iko, 274 AD2d 368.)

      Polin, Prisco & Villafane, Glen Cove (Andrew D. Polin of counsel), for Japan Airlines Management Corp., respondent.
    I. The Appellate Division correctly determined that since Japan Airlines Management Corp. was serving as the Port Authority’s agent when the accident occurred, plaintiffs’ claims against it are barred by the exclusivity provisions of the Workers’ Compensation Law. (Martin v Peyton, 246 NY 213; South Rd. Assoc., LLC v International Bus. Machs. Corp., 3 NY3d 689; Matter of Cromwell Towers Redevelopment Co. v City of Yonkers, 41 NY2d 1; Corhill Corp. v S.D. Plants, Inc., 9 NY2d 595; Muzak Corp. v Hotel Taft Corp., 1 NY2d 42; Fleischman v Furgueson, 223 NY 235; Shah v Lokhandwala, 265 AD2d 396; Matter of

      Gallagher v Houlihan Lawrence Real Estate, 259 AD2d 853; Matter of G. Fried Westbury, Inc. [Sweeney], 239 AD2d 677; Seudath v Mott, 202 AD2d 658.) II. The order appealed from should be affirmed because Japan Airlines Management Corp. did not have actual knowledge of the ice patch alleged by plaintiffs and there is no basis on which to impute to it constructive notice of that condition. (Putnam v Stout, 38 NY2d 607; Gordon v American Museum of Natural History, 67 NY2d 836; Doherty v Great Atl. & Pac. Tea Co., 265 AD2d 447; Simmons v Metropolitan Life Ins. Co., 84 NY2d 972; Golonka v Saratoga Teen & Recreation of Saratoga Springs, 249 AD2d 854; Robinson v Trade Link Am., 39 AD3d 616; Stoddard v G.E. Plastics Corp., 11 AD3d 862; Arcuri v Vitolo, 196 AD2d 519; Sellet v United Artists Theaters, 251 AD2d 488; Gordon v American Museum of Natural History, 67 NY2d 836.) III. There is no merit to plaintiffs’ claim against Japan Airlines Management Corp. regarding improper illumination of the Port Authority’s parking area. (Orr v Spring, 288 AD2d 663; Bernstein v Starrett City, 303 AD2d 530.)
   OPINION OF THE COURT

Jones, J.

In this consolidated negligence action, we are required to consider the relationship between the exclusive remedy provisions of Workers’ Compensation Law §§ 11 and 29 (6), and principles of agency. Specifically, we are asked whether Japan Airlines Management Corp. (JAMC), as the Port Authority of New York and New Jersey’s (Port Authority) putative managing agent, may benefit from the exclusive remedy defense in an action by plaintiff Brent Fung, a Port Authority employee, against JAMC. In a related action, Fung seeks to recover damages against Aero Snow Removal Corp. arising out of the same alleged injuries.

I. Facts and Procedural History

Plaintiff Brent Fung is employed by the Port Authority as an electrician. Plaintiff claims that at approximately 6:00 a.m. on January 22, 2001, he slipped and fell on a patch of ice shortly after arriving in the parking lot of Building 14 at John F. Kennedy International Airport and that he sustained back injuries requiring surgery, for which he began collecting workers’ compensation payments a year later. The Port Authority owned the Building 14 premises, which it leased to JAMC. JAMC simultaneously subleased 70% of the premises—which encompasses the subject parking lot—back to the Port Authority. The lease/sublease declared that “[t]his Agreement does not constitute [JAMC] as the agent or representative of the Port Authority for any purpose whatsoever,” and that “[n] either a partnership nor any joint [ ]venture” is created. This statement of the parties’ relationship is repeated elsewhere in the lease.

The lease obligated JAMC to contract with other entities for snow removal and electrical lighting work for the entire premises, among other maintenance responsibilities. Pursuant to the lease, JAMC contracted with Aero to commence “push and pile” snow removal operations when one inch of snow accumulated. Further, Aero would provide “ice/snow control” services—such as salting or sanding—at JAMC’s request. Finally, the contract provided that JAMC was to release Aero upon the satisfactory completion of the snow removal. The Port Authority and JAMC share maintenance expenses on a 70%/30% basis.

In 2002, Fung, and his wife suing derivatively (plaintiffs), commenced a negligence action against JAMC, among others (Action No. 1). JAMC subsequently commenced a third-party action against Aero and a fourth-party action against the Port Authority, each for common-law and contractual indemnification. Plaintiffs thereafter commenced a separate negligence action against Aero (Action No. 2). At his examination before trial, Fung testified that he did not notice any snow on top of or near the ice patch after he fell, nor did he know for how long the ice patch existed. Moreover, Fung testified that he had complained to his supervisor about poor or inadequate lighting in the parking lot.

JAMC’s representatives also testified. Rudolph Auslander, JAMC’s president, indicated that he signed the snow removal contract with Aero on behalf of JAMC as “the agent for [the] Port Authority.” JAMC’s signature line on its contract with Aero says that JAMC acted “As Agents [sic] for the Port Authority.” Sameer Sikander, a facilities manager at JAMC, testified as to the snowstorm that occurred during the two days preceding Fung’s accident, January 20 and 21, 2001. Relying on his “snow logs” created during the storm, Sikander testified that salting of the Building 14 parking lot occurred between 10:30 p.m. on January 20 and 1:30 a.m. on January 21, but that subsequent salting may have taken place. He further testified that heavy snow fell in the early morning hours of January 21 and that snow clearing operations began around 3:00 a.m. and continued into the afternoon. Further, Aero’s operations manager, Joseph Boecio, testified that the JAMC/Aero contract did not require Aero to affirmatively salt or sand any area; that, based on Aero’s records, all of Aero’s work concerning the snow storm in question occurred on January 21, between 12:30 a.m. and 3:15 p.m., a day before Fung’s accident; and that Aero did not sand or salt the parking lot on January 21. • , .

Following discovery, JAMC moved for summary judgment dismissing the complaint and all cross claims asserted against it. JAMC argued that, as the Port Authority’s agent responsible for maintenance of the parking lot and lighting fixtures, it was immune from liability under the exclusive remedy provisions of the Workers’ Compensation Law. Additionally, JAMC argued that, in any event, it did not have actual or constructive notice of the alleged ice patch or of the parking lot’s allegedly poor lighting.

Aero subsequently moved for summary judgment dismissing JAMC’s third-party complaint against it in Action No. 1 and separately moved for summary judgment dismissing plaintiffs’ complaint in Action No. 2. Further, the Port Authority moved for summary judgment dismissing JAMC’s fourth-party complaint against it in Action No. 1, and JAMC cross-moved for the same relief on the second and third causes of action for contractual indemnification, apparently abandoning its common-law indemnification claim.

Supreme Court denied JAMC’s and Aero’s motions to dismiss plaintiffs’ claims, and Aero’s motion to dismiss JAMC’s third-party complaint. Further, the court granted the Port Authority’s motion to the extent of dismissing JAMC’s common-law indemnification claim in the fourth-party complaint in Action No. 1, but denied its motion, and JAMC’s cross motion, as to the contractual indemnification claim, noting that questions of fact existed as to JAMC’s liability in the underlying personal injury action. The court rejected JAMC’s exclusive remedy defense because JAMC and Fung’s employer, the Port Authority, “are separate legal entities” with “separate income tax returns, separate budgets, and separate day-to day control” even though they may have “some financial interrelation” (2005 NY Slip Op 30132[U], *4).

JAMC appealed from so much of Supreme Court’s order as denied its motion for summary judgment dismissing the complaint in Action No. 1 and denied its cross motion for summary judgment on the contractual indemnification claim in its fourth-party complaint against the Port Authority. Aero cross-appealed from so much of Supreme Court’s order as denied its motions for summary judgment dismissing JAMC’s and plaintiffs’ complaints against it.

The Appellate Division reversed Supreme Court’s order, insofar as appealed from, granted JAMC’s motion and dismissed the complaint and all cross claims asserted against it in Action No. 1, granted Aero’s motion and dismissed the third-party complaint in Action No. 1 and the complaint in Action No. 2, and “severed” Action No. 1 “against the remaining defendants” (Fung v Japan Airlines Co., Ltd., 31 AD3d 707, 707-708 [2d Dept 2006]). As to the injured plaintiffs underlying action against JAMC, the court relied on Seudath v Mott (202 AD2d 658 [2d Dept 1994], lv dismissed 85 NY2d 890 [1995]) and determined that because JAMC “was serving as the Port Authority’s managing agent when the accident occurred, the plaintiffs’ claims against [JAMC] are barred pursuant to the exclusivity provisions of Workers’ Compensation Law § 29” (id. at 708).

As to Aero in Action No. 2, the court concluded that plaintiffs failed to raise a triable issue of fact in response to Aero’s demonstrated entitlement to judgment as a matter of law. The court determined that the parties’ remaining contentions were either rendered academic or were without merit. This Court granted plaintiffs’ motion for leave to appeal.

II. Discussion

A. Action No. 1: Fung v Japan Airlines Company, Ltd., et al.

Workers’ Compensation Law §§ 11 and 29 (6) restrict an employee from suing his or her employer or coemployee for an accidental injury sustained in the course of employment. However, the workers’ compensation remedy is generally not exclusive if the employee is injured by a third person (see Minkowitz, Practice Commentaries, McKinney’s Cons Laws of NY, Book 64, Workers’ Compensation Law § 29, at 196). Central to the issue before us is whether JAMC was Fung’s employer entitled to claim exclusivity.

Plaintiffs argue that in finding that JAMC acted as the Port Authority’s managing agent, the Appellate Division disregarded the clear statement of intent in the JAMC/Port Authority lease; that, in any event, the court misapplied the exclusivity defense to bar their action against JAMC because even if JAMC may be considered the Port Authority’s agent, JAMC was neither “in the same employ” as Fung, a Port Authority employee (see § 29 [6]), nor Fung’s employer within the meaning of Workers’ Compensation Law § 11. JAMC, in turn, contends that it was effectively the Port Authority’s agent, noting that the JAMC/Aero contract states that JAMC “represents that all charges under this Agreement are incurred by [JAMC] as agent for the Port Authority” and that it signed the contract “As Agents for the Port Authority” (emphasis added).

Initially, we note that whether or not JAMC actually served as the Port Authority’s managing agent, on this record its defense must fail as a matter of law (see Thompson v Grumman Aerospace Corp., 78 NY2d 553, 557 [1991]). The Appellate Division here relied on its decision in Seudath, concluding that JAMC is entitled to the exclusive remedy defense simply because it is the Port Authority’s managing agent. We do not read Seudath as supporting this conclusion and, in any event, the purported managing agency status in the present case does not establish a relationship between JAMC and Fung that would allow JAMC to assert the Workers’ Compensation Law defense. In Seudath, plaintiff was the superintendent of a building co-owned by a married couple. Plaintiff received workers’ compensation payments and then sued the building’s co-owner, a managing agent and a company that “manage[d] the premises” (202 AD2d at 658). Critically, the defendants were deemed to have “ ‘operated’, ‘maintained’, and ‘controlled’ the premises” and were thus held to be either plaintiffs “coemployees or special employers” (id. at 659). This conclusion necessarily implies that the defendants had some cognizable working relationship with the plaintiff or his employer that rendered them either the plaintiffs employer or coemployee for Workers’ Compensation Law purposes.

The exclusive remedy doctrine has been previously extended to persons or entities other than the injured plaintiffs direct employer (see e.g. Thompson, 78 NY2d 553 [1991] [special employers]; Ugijanin v 2 W. 45th St. Joint Venture, 43 AD3d 911 [2d Dept 2007] [same]; Alvarez v Cunningham Assoc., L.P., 21 AD3d 517 [2d Dept 2005] [same]; Kramps v Goldbetter, 292 AD2d 571 [2d Dept 2002] [employer in alter ego context]; Gonzalez v Lovett Assoc., 228 AD2d 342 [1st Dept 1996] [special employer in managing agency context]; Reynoso v Kensington Mgt. Servs., 181 AD2d 415, 415 [1st Dept 1992] [same]; Felder v Old Falls Sanitation Co., 47 AD2d 977 [3d Dept 1975], affd 39 NY2d 855 [1976] [employer in joint venture context]; Fallone v Misericordia Hosp., 23 AD2d 222 [1st Dept 1965], affd 17 NY2d 648 [1966] [same]) or coemployee (see e.g. Hanford v Plaza Packaging Corp., 2 NY3d 348, 350 [2004]; Macchirole v Giamboi, 97 NY2d 147 [2001]; Sojka v Romeo, 293 AD2d 522 [2d Dept 2002]).

Essential to all of these decisions is a working relationship with the injured plaintiff sufficient in kind and degree so that the third party, or the third party’s employer, may be deemed plaintiffs employer. In Thompson, for example, we reaffirmed the principle that an employee “of one employer may also be in the special employ of another” when certain factors exist (78 NY2d at 557). A special employee is “one who is transferred for a limited time of whatever duration to the service of another,” and limited liability inures to the benefit of both the general and special employer (id.; see also Schramm v Cold Spring Harbor Lab., 17 AD3d 661, 662 [2d Dept 2005]). Although no one factor is determinative, a “significant” and “weighty feature” in deciding whether a special employment relationship exists is “who controls and directs the manner, details and ultimate result of the employee’s work”—in other words, who determines “all essential, locational and commonly recognizable components of the [employee’s] work relationship” (78 NY2d at 558; see also Ugijanin, 43 AD3d at 913 [discussing “(p)rincipal factors in determining the existence of a special employment relationship,” including control, direction and supervision, payment of wages and furnishing of equipment, hiring and discharging, among others]). Thus, we have always looked to the underlying facts of the parties’ relationship, and the same considerations govern a section 11 claim to immunity in other contexts, regardless of title.

Similarly, in Macchirole, we reiterated the basic principles for assessing an immunity defense under section 29 (6). “Parties are coemployees in ‘all matters arising from and connected with their employment’ ” (97 NY2d at 150, quoting Heritage v Van Patten, 59 NY2d 1017, 1019 [1983]). Among other limitations not relevant here, the parties must have been “acting within the scope of their employment, as coemployees, at the time of injury” (id.; see also Hanford, 2 NY3d at 350).

Thus, it is not the title of the purported “employer”—in this case, a putative managing agent—that controls, but rather the actual working relationship between that party and the purported “employee.” Here, JAMC argues agency but stops conspicuously short of explaining its working relationship with Fung or his employer. The title alone, however, does not suffice (see Thompson, 78 NY2d at 557; Bynog v Cipriani Group, 1 NY3d 193, 200 [2003]; Macchirole, 97 NY2d at 150; see also Smith v Delta Intl. Mach. Corp., 2007 WL 1540958, *5, 2007 US Dist LEXIS 38373, *16 [ED NY 2007] [“regardless of the (managing agency) title, the entity must demonstrate that it controlled and directed the manner, details and ultimate result of the employee’s work”]; Dashnau v Coulston Found., 1997 WL 305255, *3, 1997 US Dist LEXIS 7602, *8 [SD NY 1997] [noting that managing agency status “begs the question of the actual ‘degree of control exercised over the employee’ and, more importantly, whether the (agent) enjoyed ‘exclusive daily control over the direction and manner’ of (the employee’s) work”]).

If, on the other hand, JAMC argues by implication, as it appears to do, that it had a working relationship with Fung or the Port Authority sufficient to be deemed his special employer, no record evidence exists to support that conclusion. Instead, the record reflects that the Port Authority directed, supervised and controlled all aspects of Fung’s employment as an electrician. As plaintiffs argued, “there has been no evidence that [JAMC] had any contact with plaintiff at all.” Moreover, JAMC does not seriously argue that it is Fung’s coemployee (see Workers’ Compensation Law § 29 [6]). We thus conclude, as did Supreme Court, that the Port Authority and JAMC are separate legal entities with separate day-to-day control over their respective employees’ work. Accordingly, neither section 11 nor section 29 (6) serves to bar plaintiffs’ action against JAMC.

B. Action No. 2: Fung v Aero Snow Removal Corp.

In their direct action against Aero, plaintiffs concede that the JAMC/Aero contract to provide snow removal services does not, standing alone, trigger a duty of care running to them. They argue, nevertheless, that Aero’s failure to salt or sand the area of snow it plowed left open the possibility that the mounds of snow may have melted and refrozen, or that its plowing left a thin sheet of snow, thus creating or exacerbating a dangerous condition. This argument is without merit.

We have recognized three exceptions to the general rule that a “breach of a contractual obligation will not be sufficient in and of itself to impose tort liability to noncontracting third parties upon the promisor” (Church v Callanan Indus., 99 NY2d 104, 111 [2002]). While plaintiffs urge the exception based on negligent performance of a service required under a contract, we have previously rejected a similar argument in Espinal v Melville Snow Contrs. (98 NY2d 136 [2002]). As we noted in Espinal, by merely plowing the snow, as required by the contract, defendant’s actions could not be said “to have created or exacerbated a dangerous condition” (id. at 142). Here, as in Espinal, plaintiffs point to no term of the JAMC/Aero contract that required Aero to salt or sand the parking lot absent JAMC’s request to do so, nor to record evidence that such a request was made. Therefore, because Aero owed no duty of care to Fung, plaintiffs’ claim against Aero must fail.

Accordingly, the Appellate Division order should be modified, with costs to plaintiffs against Japan Airlines Management Corp., by remitting to the Second Department for consideration of issues raised but not determined on the appeal to that court that pertain to plaintiffs and Japan Airlines Management Corp. and, as so modified, affirmed, with costs to Aero Snow Removal Corp. against plaintiffs.

Chief Judge Kaye and Judges Ciparick, Graffeo, Read, Smith and Pigott concur.

Order modified, etc.

       In dismissing plaintiffs’ claims against JAMC in Action No. 1, the Appellate Division neither considered on the merits, nor expressly dismissed, JAMC’s fourth-party contractual indemnification claims against the Port Authority. Accordingly, on remittal the Appellate Division must consider JAMC’s action against the Port Authority in light of our holding. Although in its purported severance the Appellate Division order suggests that actions against defendants other than the Port Authority remained pending, the actions against all other defendants originally named in plaintiffs’ complaint had been dismissed in earlier proceedings at Supreme Court.