Published on:

Defendants Argue Post Judgment Assignment Agreement Contrary to Public Policy


Defendants argue that the combination of the permissible WCL exclusion of Dole v. Dow with an otherwise enforceable post judgment assignment agreement creates an unenforceable exclusion to the Workers’ Compensation Law. This personal injury court disagrees.

Defendants’ liability in this case stems from a straightforward application of the Dole v. Dow exception to the Workers’ Compensation Law. The loan arrangement is not an extension of the Dole v. Dow exception. It does not create liability where none otherwise existed. The loan merely permits the enforceability of a judgment which is otherwise permissible under Dole v. Dow. The loan arrangement was expressly approved by the Court of Appeals in Feldman v. NYCHHC, supra.

The subsequent Court of Appeals decision in Gonzales v. Armac Industries, Ltd., 81 N.Y.2d 1, 595 N.Y.S.2d 360, 611 N.E.2d 261 (1993) does not command a different result. In Gonzales the court considered the enforceability of a pre-trial agreement in which a plaintiff agreed not to enforce any judgment against defendant in excess of 2% of the total damages awarded except to the extent loan arrangements were made to permit the plaintiff to collect any monies from the third party defendant. The court held that the pre-trial agreement, which limited defendants’ liability to 2%, was a release from liability within the meaning of sec. 15-108(c) of the General Obligations Law. The court went on to recognize that the agreement did violence to the Workers’ Compensation Law by indirectly allowing an employee to reach beyond an impecunious or insolvent defendant and into the employer’s deep pockets for recovery. Defendants argue that the Court’s decision in Gonzales means that in the context of the Workers’ Compensation Law, Feldman type assignment agreements will not be enforced.

Defendant’s arguments read too much into Gonzales. Gonzales does not overrule or otherwise limit Feldman either in the context of the Workers’ Compensation Law or generally. Indeed the court expressly distinguishes its holding in Gonzales from the loan arrangements it approved in Feldman. The Court states in Gonzales, in pertinent part: Nor is there merit to appellants’ contention that the agreement here is simply a loan arrangement similar to the one sanctioned in Feldman v. New York City Health and Hosps. Corp. In Feldman, the Court approved an agreement in which a stranger to the litigation loaned the main defendant the amount necessary to pay the plaintiff so that it could then seek contribution from the third-party defendant. There, the relative accident liabilities had already been established at trial and the parties were simply attempting to devise a way to satisfy those liabilities. This case is distinguishable because the agreement was reached prior to trial and prior to the determination of the parties’ relative exposure to liability.

The two distinguishing factors recognized by the Court of Appeals in Gonzales are also present at bar. First, the assignment agreement was made two years after judgment was entered. It was not a pre-trial arrangement. There is every reason to believe that the Ws put forth a full defense at the trial of the Bronx action. In addition the loan agreement was made with a third party who is a stranger to the litigation. ZG made the loan as a investment opportunity to make over a 10% return on her money.

Accordingly the court finds that the assignment agreement is fully enforceable by ZG against SIF and AIIC.

AIIC claims that it is additionally entitled to summary judgment dismissing the complaint because B.C. Enterprises, Inc., its insured, failed to give it Notice of the Claim “as soon as practicable” as required under the policy. The underlying injury occurred on October 7, 1981. AIIC’s first notice of the claim was February 9, 1990, over eight years later. The notice appears to have been in response to B.C. Enterprises, Inc.’s receipt of a third party summons and complaint from the City of New York.

Posted in:
Published on:

Comments are closed.

Contact Information