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Legislative Memo

Ken Pokalsky
Vice President of Government Affairs
T 518.465.7511
www.bcnys.org

BILL:

S.3761 (DeFrancisco) / A.630 (Weinstein)

Support

SUBJECT:

Indirect Recovery from Third Party Defendant

 

DATE:

June 21, 2012

 

The Business Council opposes S.3761 (DeFrancisco)/A.630 (Weinstein) which amends the CPLR to allow a plaintiff to obtain an indirect recovery from a third-party-defendant when that plaintiff’s judgment against an original defendant was not satisfied within thirty days of the judgment being served.

Perhaps of greatest concern, this legislation also allows recovery by a plaintiff from a third-party-defendant even in cases when the Statute of Limitations has expired for any claim the plaintiff could traditionally bring against the third-party defendant, exposing the third-party-defendant to open-ended liabilities and turning long standing legal restraints on their head.

The bill creates a perverse disincentive to a defendant to satisfy a costly judgment. Under this system, non-paying defendants may end up “off the hook” by fraudulently filing for bankruptcy, knowing that a plaintiff will have an easier time pursuing the satisfaction of a judgment on a solvent third-party-defendant rather than opposing a bankruptcy filing. This problem is exacerbated when the third-party-defendant is perceived as a “deep pocket,” such as a corporation, insurer, health plan or a municipality.

Under common law, the concepts of legal duty and privity of contract are necessary to legally obligate a defendant to a plaintiff in tort and contract law respectively. This bill removes the necessity of that relationship and would make the insurer of a third-party defendant liable under circumstances where no duty is ordinarily owed.

For these reasons The Business Council respectfully opposes enactment of S.3761 (DeFrancisco)/A.630 (Weinstein).