Every year the Court of Appeals has the opportunity to grapple with issues in the areas of negligence. Several of the most significant decisions of 1992 by the Court are considered. This article discusses these recent holdings by the Court, along with their social policy considerations. Interspersed are this author's commentary of the apparent trends which led to the Court's opinions which may, to some extent, be predictive of the Court's decisions in 1993.

In Mosher v. State of New York, 80 N.Y.2d 286, 590 N.Y.S.2d 53, the Court reiterated earlier decisions in which it held that Labor Law § 241 is not limited to building sites. The Court endorsed its reasoning in prior cases where it held that the introductory language of § 241, which appears to limit the applicability of all of the subdivisions to work done in connection with building construction, is not to be taken literally.

The Court reasoned that the history of subdivision (6) reveals that the scope of the statute was not intended to be so limited. Although the 1969 amendment added the language which allowed several courts to construe a limitation, the Court of Appeals finds that the Legislature had no intention of narrowing the scope of the statute§ s protection, when the statute was recodified.

The Court's holding is not new, but it was necessary to address the issue again since there have been recent contrary interpretation of § 241(6) which failed to be cognizant of the earlier decisions by the Court of Appeals. The Court clearly indicates that these contrary interpretations should not be followed.

The Court acknowledges in Lombardi v. Stout, 80 N.Y.2d 290, 590 N.Y.S.2d 55, that Labor Law § 240(1) protects workers only when work is being performed "on a building or structure". Since the plaintiff in Lombardi was injured when he fell from a ladder while cutting a limb from a tree, both lower courts held that this section was not applicable because the tree was not a "building" or a "structure". However, although the Court acknowledged that a tree is "clearly not a building or a structure" within the definition of the statute, it concluded that plaintiff had submitted sufficient evidence to warrant a trial of his cause of action based on § 240(1) since the removal of the tree was part of the house construction and site work for a driveway and parking lot.

The Court acknowledged that § 240 is intended to place the ultimate responsibility for building practices on the owner and general contractor in order to protect the workers and that the statute is to be construed "as liberally as may be to achieve this purpose" [quoting Zimmer v. Chemung County Performing Arts, 65 N.Y.2d 513, 520-521, 493 N.Y.S.2d 102, which was quoting Quigley v. Thatcher, 207 N.Y. 66, 68].

The defendant alternatively argued that the building is a one or two family house which should exempt him from liability under the statutory exception for owners of such dwellings. But the Court noted that this exception was "enacted to protect those people, lacking business sophistication, who would not know or anticipate the need to obtain insurance to cover them against the absolute liability imposed by § 240(1)" id. 296. Thus the Court concluded that the statute was "not intended to insulate from liability owners who use their one or two family houses purely for commercial purposes (citation omitted). In those circumstances, the houses are more accurately considered as commercial enterprises than as one or two family houses." Id. 296, 297. Since the defendant owner's purpose for renovation was to prepare the house for commercial rental, the Court held that the plaintiff had established a question of fact with respect to defendant's intended use of the property and therefore plaintiff's § 241(1) cause of action was reinstated.

The dissenting opinion by Justice Bellacosa in Lombardi is enlightening. He noted that since the entire Court agrees that "a tree is clearly not a 'building' or a 'structure'" id. at 297, for the purposes of this section of the labor law, both the lawsuit and further "judicial inquiry" should end. "Instead the Court promulgates a new rule significantly extending absolute liability for accidents in which work on naturally occurring objects is shown simply to be 'part of' construction on a building or structure" id. 298. Justice Bellacosa calls this "judicial legislation" noting that "it simply erects a new test not previously recognized within the Labor Law § 240(1) absolute liability sphere" id. 298.

The dissenting opinion correctly notes that this "sweeping innovation" will "virtually guarantee triable issues" in most of these labor law cases "when this exceedingly flexible formula is applied to the widely varying fact patterns that are certain to bloom" id. at 298. He also notes that confusion will be created by the Court's analysis to the statutory exception for owners of one and two family dwellings, since now the notion of commercial versus residential classification has apparently become a relevant fact along with the future plans for the property and the purposes of the renovations. As Justice Bellacosa concludes:

I believe there is not justification for extending absolute liability in this fashion and no practical good sense in adding new and seemingly unlimited uncertainties to an already cluttered and complicated legal universe. Id. at 298.

From these two cases, which involve different sections of the labor law, it seems that the Court is holding a broad and more inclusive interpretation to § 241 by not limiting it to a building or a structure, and in § 240, although acknowledging that that section is limited to a building or structure, the Court has found that that phrase need not be so limiting. In these two cases, the Court has reinforced its view that the limiting phrase does not apply in § 241, and indicated that in § 240, the phrase should not be narrowly construed. The Court is increasing the likelihood that the responsibility will pass to the owner and general contractor.

Hospitals are given a reprieve from liability in the long wake caused by AIDS and the medical malpractice "crisis" of the 80s. Mondello v. New York Blood Center, 80 N.Y.2d 219, 590 N.Y.S.2d 19, is a tragic case where both mother and child died of complications associated with AIDS following a blood transfusion given to the mother while she was pregnant. The plaintiff sued the hospital where the mother received the blood transfusion but did not initially sue the blood center which collected, tested, and provided the blood to the hospital. The issue before the Court was whether the blood center was "united in an interest" within the meaning of CPLR 203(b). Endorsing the test of Brock v. Bua, 83 A.D.2d 61, 443 N.Y.S.2d 407, and applying it here, the Court held that the second prong of that test was not met. The blood center was not "united in interest" with the hospital, because the hospital "cannot be held vicariously liable for the alleged negligence of the blood center in a discharge of the blood center's discrete responsibilities" id. at 226.

It should be noted that the lower court dismissed the cause of action against the blood center sounding in strict product liability and breach of warranty since public health law § 580[4] provides that collection, processing, and dispensing of blood is a "public health service" and not a "sale of such blood or such blood derivative for any purpose . . . whatsoever". Another cause of action sounding in negligence was deemed governed by CPLR 214-c and thus required additional disclosure to ascertain the all important "discovery" date. The only issue before the Court of Appeals was the wrongful death cause of action which was brought beyond the two years required by EPTL 5-4.1. The Court held that CPLR 203 "is not a time machine" (id. at 230) and the wrongful death cause of action as against the blood center is time barred.

The Court enunciated a policy reducing a hospital§ s liability in such circumstances, stating that the hospital should not be vicariously liable for the negligence of the blood center. The Court noted that a "line must be drawn between the competing policy considerations of providing a remedy to everyone who was injured and of extending exposure to tort liability almost without limit" id. at 227 [quoting De Angelis v. Lutheran Med. Center, 58 N.Y.2d 1053, 1055, 462 N.Y.S.2d 626.] While acknowledging that the spread of HIV infection is a "grave" problem, the Court states that solutions should be found elsewhere and not by the Court fashioning of a new kind of tort liability. Noting that hospitals are already highly regulated and that such regulations assign duties and apportion liabilities, and that further the handling of human blood has been subject to "close government scrutiny," the Court opined that liability pertaining to blood supply does not require further judicial intervention.

Perhaps somewhat gratuitously, the Court notes that the hospital does not undertake the assumption of all medical responsibilities and services to the patient under its roof and that it is a "mistaken generality" to view the hospital as total care providers with a common, and united interest with all other providers of medical services. The Court even distinguished its decision in Hill v. St. Clare's Hospital, 67 N.Y.2d 72, 499 N.Y.S.2d 904, by noting that the hospital did not "hold itself out" as having screened the blood and that the patient should have no expectation of such a duty which is regulated and left to blood collection entities. As the Court stated: "we see no reason why each should not answer for its own wrongdoing under the general tort principle of personal responsibility, not one for another's wrongdoing by way of vicarious attribution, invoked to allow a bypass of the otherwise applicable Statute of Limitations id. at 229.

Although the defendant hospital in this case surely would like to see that there is a viable action against the blood center for its wrongdoing, this decision positions hospitals in future actions (and potentially in this action should there remain a viable cause of action against the blood center) in a most favorable position with regard to blood transfusions and HIV transmission holding that as between the hospital and the blood center each is responsible for its own wrongdoing.

In Jorge v. New York City Health and Hospitals Corporation, 79 N.Y.2d 905, 581 N.Y.S.2d 654, the Court reversed the First Department's application of the continuous treatment doctrine. Plaintiff mother has the genetic trait for sickle cell anemia and arranged for the farther of her yet unborn child to be genetically tested for the trait. The father§ s test was incorrectly interpreted as negative and their child was discovered to have sickle cell anemia. The parents alleged that they would have terminated the pregnancy had they known that the father had the sickle cell trait which would give their offspring a 25% chance of actually having the disease. The Court held that the alleged malpractice of incorrectly reading the father's genetic test results was not part of the same course of treatment of obstetric care to the mother.

It would appear that the Court agreed with the dissenting opinion of Justice Wallach in the Appellate Division. Justice Wallach's opinion is more enlightening as to the rational for such a conclusion, recalling the original purpose of the continuous treatment doctrine as articulated in Borgia v. City of New York, 12 N.Y.2d 151, 237 N.Y.S.2d 319. It would not have required any interruption in the mother's obstetric care had the father served a Summons on the physician or hospital responsible for misreading his genetic test. Nor did any delay serve the purpose of permitting the physician or hospital to provide corrective treatment. In fact, no further treatment was necessary. It appears that here in the context of health care, as seen also in Mondello above, the Court does not seek further judicial expansion of liability.

In Santulli v. Englert, Reilly, & McHugh, 78 N.Y.2d 700, 579 N.Y.S.2d 324, plaintiff's contract cause of action against a law firm (providing a six year statute of limitations) was held sufficient, reversing the Appellate Division's holding that no cause of action was stated because there was no promise to achieve a specific result. But the Court of Appeals found that plaintiff could maintain a cause of action for breach of contract based on an implied promise to exercise due care in the performance of the services by the law firm. [The Court indicated that had there been a written retainer agreement which expressly disavowed any specific promise, representations or guarantees as to obtaining any specific result, they would have reached a different result in Santulli.]

In Santulli the Court makes clear that in professional malpractice actions, the appropriate statute of limitations "is properly related to the remedy rather than to the theory of liability" (quoting Sears, Roebuck & Co. v. Enco Assocs., 43 N.Y.2d 389, 394-395, 401 N.Y.S.2d 767). Specifically in the case at bar the liability of the defendant "arises out of the agreement retaining the firm as attorneys for plaintiff in respect to the sale of his business" id. at 707, adding that "an agreement to exercise due care in the performance of the agreed services is to be implied" (emphasis added; quoting Sears supra at 396). The Court also noted that the choice of the applicable statute of limitations is governed by the remedy sought by the plaintiff and not by the theory of liability. Hence, although the defendant would argue that the "essence" of the action is malpractice or negligence, that language is better reserved where recovery for damages is for personal injury (including medical, dental, or podiatric malpractice). The Court finds different policy considerations where the plaintiff seeks to recover damages to property or for pecuniary interests. The Court held that a six year statute of limitations will be applied to a legal malpractice claim "where the remedy sought is damages relating solely to the plaintiff§ s pecuniary or property loss and which arose out of the contractual relationship" id. at 709. [See also, Security Pacific Business Credit, Inc., v. Peat Marwick Main & Co., 79 N.Y.2d 695, 586 N.Y.S.2d 87, for the Court's emphasis on the contractual relationship accountants have with clients. Malpractice claim was not permitted by a third party who could not demonstrate "privity."]

In addition to the above "contract" statute of limitations applied to what might be viewed as only a legal malpractice action, the Court appears to be looking to any contractual relationship between the parties to determine issues of liability. In Sommer v. Federal Signal Corp., 79 N.Y.2d 540, 583 N.Y.S.2d 957, the Court held that the exculpatory and limitation of liability clauses in an alarm monitoring company's contract with a building owner were enforceable. The Court openly contends with the overlap that sometimes exists with tort and contract claims finding that "[t]his case partakes of both categories, and thus falls in the borderland between tort and contract, an area which has long perplexed courts" id. at 550. The Opinion notes that contract claims arise solely from a "consensual undertaking" and the "borderland situations" seem to arise when the contract is performed negligently. Once again, as we saw in Santulli above, the Court looks to the nature of the injury and appears to place personal injury solely in the tort cause of action. But in Sommer, where the plaintiff is seeking enforcement of a bargain, "the action should proceed under a contract theory" id. at 552, citing Bellevue S. Assocs. v. HRH Construction Corp., 78 N.Y.2d 282, 574 N.Y.S.2d 165, and Clark-Fitzpatrick, Inc. v. Long Island Railroad Co., 70 N.Y.2d at 389, 390, 521 N.Y.S.2d 653.

The Court notes that the limitation of liability clause will insulate the alarm company against ordinary negligence, absent a statute or public policy to the contrary, but not from damages caused by gross negligence. In this case there is no public policy to prevent enforcement of the alarm company§ s clause limiting liability for negligence and the Court articulates its own policy considerations stating that "limitations on liability help keep alarm services affordable" id. 553. Similarly, contractual exculpatory and limitation on liability clauses were held enforceable in David Gutter Furs v. Jewelers Protection Services, ltd., 79 N.Y.2d 1027, 584 N.Y.S.2d 430 where expert opinion was held to be unnecessary in determining that defendant was not grossly negligent.

In Rosenberg v. Equitable Life Assurance Society, 79 N.Y.2d 663, 584 N.Y.S.2d 765, plaintiff's widow sued an insurance company for her husband's wrongful death from cardiac failure. The jury found that the husband suffered a fatal heart attack caused by the stress electrocardiogram which he was required to take in order to obtain life insurance. The stress EKG was performed by a private physician who was not a party to this action.

The Court articulated the general rule that an employer who hires an independent contractor is not liable for the independent contractor's negligent acts, but noted that there are exceptions. Public policy dictates that sometimes an employer's duty is non-delegable and despite lack of wrongdoing there may be liability for the independent contractor's negligence. The exception at issue in this case is where work assigned to an independent contractor is "inherently dangerous". Is a stress EKG inherently dangerous? The First Department affirmed the jury's determination and concluded that the inherently dangerous exception applied since "the doctor was mandated to follow defendant's strict protocol" id. at 670. But the Court noted that the insurer could not have requested that the examining physician perform the test contrary to his legal and professional responsibilities. Therefore the ordering of the stress EKG for a person with a serious heart problem did not, under these circumstances, as a matter of law, constitute an inherently dangerous activity.

Additionally, the physician performing the test had the legal duty to disclose to his patient the inherent risks in any dangerous procedure and to obtain the patient's consent. The insurance company could not anticipate that the physician would disregard such a duty and administer a stress EKG if it were unsafe. It appears that the Court is increasing the responsibility of the individual wrongdoer, in this case the physician if anyone at all, as in the Mondello case above. No medical doctor could be required to perform such an exam which is against the doctor's own professional judgment. As an underlying social policy consideration, the Court noted that "high risk life insurance is an intricate part of personal and commercial financial planning . . . insurers must be free, before issuing a policy, to test . . . [and] evaluate the risk presented" id. at 670. The insurance company must necessarily rely on others, in this case the medical profession, to help them evaluate the risk.

A similar policy can be seen in Jansen v. Fidelity & Casualty Company of New York, 79 N.Y.2d 867, 581 N.Y.S.2d 156. There a worker's compensation and liability insurance carrier conducted regular safety inspections of a construction site in an effort to reduce the risk of loss covered by its insurance policy. Plaintiff was injured on the work site and sued the insurance carrier. The plaintiff argued that although a carrier was not under any obligation to conduct safety inspections, once it undertook to perform such inspections, it must be held liable for conducting a negligent inspection.

The Court declined to apply the principal that one who assumes to act, even though not obligated to do so, may thereby become subject to a duty to act carefully. That principal has been limited to situations where one acts for the benefit of another rather than to further the interest of the one who acts. In this case, the safety inspections were undertaken solely for the carrier's underwriting purposes, in an attempt to reduce risks. The Court held that liability could not be imposed on the carrier.

It appears that the Court of Appeals is increasingly looking to contractual relationships to determine liability issues in "negligence" cases thereby permitting parties to legislate between themselves what the duties, responsibilities and obligations will be. The exception appears to be in the health care area and where personal injury is involved. It seems that increasingly land owners or general contractors are being held responsible for a safe place to work, particularly in commercial situations with liability insurance. From Santulli and Sommer it is clear that in order to avoid a six year statute of limitations, law firms should add a limiting or "exculpatory clause" to their retainer agreements. No cases have been decided by the Court of Appeals clarifying or modifying the complex and confusing Articles 50-A and 50-B of the CPLR. Although these statutes became effective in actions brought after July 1985 and July 1986 for medical malpractice and other personal injury actions respectively, there has been no appellate guidance which is sorely needed.