New York: Vehicle Owner Shielded from Contribution By Exclusive Remedy Defense

Answering a question certified to it by the U.S. Court of Appeals (2nd Circuit), the Court of Appeals of New York, in Isabella v. Koubek, 2014 N.Y. LEXIS 569 (Mar. 27, 2014), recently held that a defendant may not pursue a third-party contribution claim under N.Y. Vehicle and Traffic Law § 388–which renders a vehicle owner vicariously liable for injuries resulting from the negligent permissive use of a vehicle–where the driver’s negligence was a cause of the plaintiff’s injuries, but the driver is insulated, by reason of co-employee status, from a lawsuit by virtue of the exclusive remedy provisions of the New York Workers’ Compensation Law [N.Y. Work. Comp. Law § 29 (6)].

Earlier Decisions

The court observed that its decision was consistent with two early cases–Rauch v. Jones, 4 N.Y.2d 592, 152 N.E.2d 63, 176 N.Y.S.2d 628 (1958) and Naso v. Lafata, 4 N.Y.2d 585, 152 N.E.2d 59, 176 N.Y.S.2d 622 (1958)–in which the court had determined that a passenger who was the co-employee of a driver could not sue the vehicle owner to recover damages based on the negligence of the driver.

The court acknowledged that Rauch and Naso were not directly on point since they involved actions brought by injured employees against vehicle owners, not third-party contribution claims. The court indicated, however, that it had extended the reach of Rauch and Naso to third-party claims in an analogous context in Kenny v. Bacolo, 61 N.Y.2d 642, 460 N.E.2d 219, 472 N.Y.S.2d 78 (1983), in which the court not only dismissed a third-party defendant’s claim against a driver (who was also a co-employee of the third-party defendant), but further dismissed the third-party contribution claim seeking to hold the vehicle owner vicariously liable for the driver’s negligence, finding that the vehicle owner was was immune from liability under the federal Longshoremen’s and Harbor Workers’ Compensation Act.

No Meaningful Distinction Between LHWCA & NY Law

The court continued that it do not see any meaningful distinction between Kenny and the instant case. The only difference was that Kenny involved the exclusivity provisions found in the federal Longshoremen’s and Harbor Workers’ Compensation Act. The court indicated that the relevant portions of the federal act were comparable to sections 11 and 29 (6) of the Workers’ Compensation Law.

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