Dacus v. Spiniello & Nesto Corp., 267 N.E.2d 427 (N.Y. 1971)
Acceptance of workers’ compensation benefits does not automatically constitute a waiver of federal maritime rights under Section 113 of the New York Workmen’s Compensation Law; a clear intention to waive such rights must be evident.
Summary
Three widows, whose husbands died in a boating accident during their employment, received workers’ compensation benefits and then filed a negligence and unseaworthiness claim against their employer and related companies. The employer argued that accepting workers’ compensation waived their right to sue under federal maritime law. The New York Court of Appeals reversed the Appellate Division’s dismissal, holding that a question of fact existed as to whether the plaintiffs intended to waive their federal rights by accepting the compensation payments, especially since they had notified the employer of a pending third-party action.
Facts
Roy Dacus, Patrick Kenny, and Ralph Moracco, employees of Spiniello & Nesto Corp., died in a boating accident on Seneca Lake on January 20, 1962. Their widows received workers’ compensation benefits from Spiniello & Nesto Corp. Subsequently, the widows initiated a lawsuit alleging negligence and unseaworthiness against defendants who allegedly owned, controlled, or managed the boat, including Spiniello & Nesto Corp. The widows formally notified Spiniello & Nesto Corp. of their third-party action, although the suit initially omitted the employer as a named defendant.
Procedural History
The defendants, Spiniello & Nesto Corp., Spiniello Construction Co., and the Spiniello brothers, moved to dismiss the complaint under CPLR 3211 and 3212, asserting that the plaintiffs’ acceptance of workers’ compensation barred their Jones Act claim. The Supreme Court denied the motion, finding a factual issue regarding the intent to waive federal rights. The Appellate Division reversed, dismissing the complaint, relying on the Ahern case. The New York Court of Appeals reversed the Appellate Division, reinstating the Supreme Court’s order, finding a factual dispute regarding waiver.
Issue(s)
Whether the plaintiffs’ acceptance of workers’ compensation benefits constituted a waiver of their federal maritime rights, precluding them from pursuing a negligence and unseaworthiness claim against their employer under the Jones Act.
Holding
No, because a question of fact existed as to whether the plaintiffs intended to waive their federal maritime rights by accepting the workers’ compensation benefits, especially considering their notification to the employer of a pending third-party action.
Court’s Reasoning
The Court of Appeals emphasized that while extended, unqualified acceptance of compensation payments *can* constitute a waiver, it is not automatic. Section 113 of the Workmen’s Compensation Law empowers the board to make awards when parties elect to settle and forego federal rights. Quoting Matter of Ahern v. South Buffalo Ry. Co., the court stated that the statute “is not to be imposed upon them in the absence of a joint waiver or agreement evidencing an intention to be bound by its terms.” The court distinguished the case from situations where employees claim and accept compensation without alerting the employer to potential litigation. The fact that the plaintiffs notified the employer of a “third party” lawsuit (even before the award) suggested they did not intend to rely solely on workers’ compensation. The court noted that, because of the interrelation of the Spiniello companies, Spiniello & Nesto likely knew they were the ultimate target. Furthermore, the court clarified that asserting federal rights is not a collateral attack on the compensation award; any recovery would simply be subject to a setoff for compensation payments already made. The court determined that a trial was necessary to ascertain the parties’ true intentions. The court emphasized that “the payment and acceptance of compensation once their suit had been instituted could not operate as a waiver of Federal rights and remedies.”