Motion to Amend; CPLR 3025(b); Implied Indemnification; Governmental Entity; Assignee; Successor; Workers Compensation; Group Self-insured Trusts; 12 NYCRR 317.8.
By: Angela Cipolla | Staff Writer
Plaintiff is the governmental entity and successor to eight Group Self-Insured Trusts (“GSITs”). Plaintiff is now involved in three separate actions : (1) a Workers’ Compensation action, against Defendants, the trustees of one of the GSITs (“Trustees”); (2) an action against Defendant accounting firm , UHY, LLP ,which provided professional financial services to the GSITs (“UHY”); and (3) an action in which Plaintiff served as an assignee of the GSIT HITNY’s employer-members’ claims. All three actions were consolidated before the Court.
Plaintiff moved for leave to amend all three complaints to insert claims for implied indemnification against the Trustees in the first action, against UHY in the second action, and against both Trustees and UHY in the third action on the basis that both Defendants had a duty to maintain solvency. Additionally, Plaintiff moved to update the factual allegations pertaining to the GSIT’s deficits in the second action. Plaintiff moved to amend in three capacities: (1) as a governmental entity of the GSITs for the first and second action, (2) as a successor of the GSITs for the first and second action, and (3) as an assignee of HITNY’s employer-members claims for the third action. In opposition, Defendants argued that Plaintiff’s indemnification claims lacked merit because each defendant had no duty to maintain solvency of the GSITs.
Under CPLR 3025(b), a motion to amend may be granted freely so long as two requirements are met: (1) there is no prejudice to the nonmoving party, and (2) the proposed change is not “plainly lacking in merit.” Here, the first element was not at issue because the Defendants conceded there was no prejudice. The Court held the second element under CPLR 3025(b) was not satisfied in each action. An implied indemnification claim may be meritorious in a complaint if there is a “separate duty owed to the indemnitee by the indemnitor.” Here, Plaintiff’s claim as a governmental entity in the first action was meritorious, but not in the second action. The GSIT had a duty to maintain solvency and, therefore, Plaintiff’s claim was meritorious. However, the second action lacked merit because professionals do not have a duty of solvency to a trust. Additionally, the Court ruled that Plaintiff’s claims, in regards to Plaintiff as a successor, lacked in merit in both its first and second action. Here, the Court held that because Plaintiff failed to rely on duties discharged by the Trustees, it could not indemnify the parties. Plaintiff’s claim as an assignee in its third action lacked merit because GSIT trustees only owed a duty with the employer-members to assure solvency of accounts, not assignees.
Accordingly, for WCB’s first action, the Court ordered that the motion to amend be granted in full. For the second action, the Court ordered the motion to amend to be granted in part, limited to WCB’s request to update factual allegations. Finally, in the third action, the Court ordered that the motion to amend be granted in part, limited to allegations related to the HITNY trustees, as it determined UHY did not have a duty of solvency.
N.Y.S Workers’ Comp. Bd. v. Comp. Risk Managers LLC, Index No. 10288-09 02/11/16 (Platkin, J.)